GBP/USD refreshes daily low post-NFP, bears flirt with 1.3100 mark amid stronger USD

• Sustained USD buying dragged GBP/USD lower during the early North American session.
• The US NFP report reaffirmed Fed rate hike bets and continued underpinning the buck.
• The risk-on mood might cap the safe-haven USD and help limit deeper losses for the pair.

The GBP/USD pair witnessed some selling during the early North American session and dropped to a fresh daily low, closer to the 1.3100 mark following the release of the US jobs report.

The headline NFP showed that the US economy added 431K jobs in March, less than the 490K expected. The disappointment, however, was largely offset by an upward revision of the previous month's reading to 750K from the 678K reported earlier. Furthermore, the unemployment rate fell to 3.6% from the 3.8% previous, while Average Hourly Earnings rose 0.4% MoM as compared to an upward revised 0.1% in February.

There were no big surprises in the report, though the details reinforced market bets that the Fed would hike interest rates by 100 bps over the next two meetings. This, in turn, pushed the US Treasury bond yields higher and continued underpinning the US dollar, which exerted some downward pressure on the GBP/USD pair. That said, a positive risk tone capped the safe-haven buck and extended some support to the major.

Bulls, so far, have managed to defend the 1.3100 round-figure mark, which should now act as a pivotal point. A convincing break below would expose the weekly low, around mid-1.3000s. Some follow-through selling would make the GBP/USD pair vulnerable to accelerating the slide to the YTD low, around the 1.3000 psychological mark.

With the key data out of the way, the market focus shifts back to fresh developments surrounding the Russia-Ukraine saga. Investors remain optimistic about the possibility of a breakthrough in the Russia-Ukraine peace talks and a diplomatic solution to end the way. This was evident from a goodish move up in the equity markets.

Hence, the incoming geopolitical headlines will continue to play a key role in influencing the broader market risk sentiment. This, along with the US bond yields, will drive the USD demand and produce some trading opportunities around the GBP/USD pair on the last day of the week.

Technical levels to watch