The handling of the United States (US) NFP employment data report published last week triggered a drastic price plunge on the chart of the GBP/USD currency pair.
The pound which managed to strengthen after the policy meeting of the central bank of England (BOE) last Thursday failed to continue the positive pace when the loss was worse on Friday.
The market has reacted to the NFP data which saw all three components involving job growth, average wages and unemployment record good readings for January.
This further reduces expectations for interest rate cuts by the Federal Reserve (Fed) at the same time encouraging the strengthening of the US dollar currency.
With the significant strengthening of the US dollar causing other major currencies to experience pressure in the closing market last week including the Pound.
On the GBP/USD chart last Friday, the price which initially hovered at the height of 1.27700 then plunged below 1.27000 and headed for the 1.26000 zone.
The daily plunge of around 150 pips gives a bearish signal with the price also starting to move below the Moving Average 50 (MA50) barrier line on the 1-hour time frame on the chart.
Continuing to trade at the opening earlier this week, the price continued its slow decline towards 1.26000 to test that important support.
Price reaction will be observed for further direction of price movement.
If the price breaks below the 1.26000 zone, the bearish price movement is expected to continue again with the target moving to 1.27000 in addition to recording the latest 8-week low.
On the other hand, if the price bounces from the 1.26000 zone, the increase can happen again for investors to watch for signs of a price recovery.
The MA50 barrier and the 1.27000 level will try to be breached before the move higher continues to last week's levels.
