British Pound cracks 1.3400 as blowout US NFP revive Fed hike bets

The Pound Sterling (GBP) dives nearly 0.60% against the US Dollar (USD) as a stellar US Nonfarm Payrolls report shows a solid labor market and clears the path for further tightening by the Federal Reserve (Fed). At the time of writing, GBP/USD trades at 1.3371 after peaking near 1.3463.

GBP/USD plunges nearly 0.60% to 1.3371, breaking below 1.3400.

US payrolls surge 165K versus 65K expected; unemployment falls to 4.1%.

GBP/USD tumbles on strong NFP, reinforcing Fed tightening expectationsUS Nonfarm Payrolls in October exceeded estimates of 65K, rising to 165K, while figures from September were upwardly revised from 29K to 60K.

The report lowered the Unemployment Rate to 4.1%, as employers added jobs across sectors.

The survey showed that Americans see inflation edging lower, with one-year inflation expectations at 4.3% down from 4.7% and five-year expectations at 3.4% down from 3.5%After the data, the CME FedWatch Tool shows that investors increased the odds of a December Fed rate hike from 67% a day ago to nearly 77%.

St. Louis Federal Reserve President Alberto Musalem said that “people remain concerned about inflation at the current level,” adding that inflation expectations remain anchored and that current excess inflation is due to energy shocks and the AI buildout.

In the UK, the Bank of England (BoE) rate hike was a tailwind for GBP/USD, but failure of a decisive breakout above 1.3500 exacerbated the Pound’s fall beneath 1.3400 during Friday’s session.

In the US, the release of CPI figures, jobless claims, and Fed officials' comments can influence the direction of the GBP/USD pair.