GBP/USD drops to one-week lows under 1.3875 amid a rally of USD

• US dollar extends gains during the American session as US yields soar.
• Cable fails to hold to weekly gains, drops below 1.3900.

The GBP/USD extended the decline to 1.3860, the lowest level in a week, on the back of a stronger US dollar across the board. The greenback started a rally after the release of the US official employment report that continues.

NFP numbers came in above expectations and triggered a sell-off in Treasuries. The US 10-year yield jumped toward 1.30%, supporting the rally of the dollar. The DXY gains more than 0.60% on Friday, and is at weekly gains near 92.80.

GBP/USD techs: positive momentum at risk

Yohay Elam, Senior Analyst at FXStreet, says the momentum on the daily chart has flipped to the upside, but only just. “The recent upswing has saved the currency pair from dipping below the 50-day Simple Moving Average (SMA), and it has recently been setting lower highs – a bearish sign. On the other hand, GBP/USD is trading above the 100 and 200-day SMAs.” 

On the flip side, Elam warns that significant support is at 1.3875, which is a double-bottom formed in the past few weeks. “It is followed by 1.3845, which was a cushion last month and also where the 200 SMA hits the price. Further down, 1.3760 and 1.3730 are additional levels of interest.”

Technical levels