• Employment data released on Friday which beat the expectation with huge difference favored the US dollar.
• Brexit issue and the UK politics also weigh on the Cable.
• Investors now await US inflation data on Thursday.

The British pound dropped against the greenback during Monday trading session. The US employment job data released on Friday, Brexit issues and the UK politics are the catalysts in driving the move of the cable.

The U.S. dollar bounced back from two-week lows on Friday after data showed the world’s largest economy created far more jobs than expected. The jobs data showed US nonfarm payroll grew to 467000 jobs in the month of January which is much larger than the expectation of -192000. Data for December was revised higher to show 510,000 jobs created instead of the previously reported 199,000.

Average hourly earnings, a measure of wage inflation and a closely-watched metric, also rose 0.7% last month vs expectation of 0.4% , and 5.7% vs expectation of 4.8% on a year-on-year basis.

Traders were prepared for a weaker-than-forecast reading given the decline in the ADP U.S. private payrolls report released earlier last week which showed a decline due to the impact of the Omicron coronavirus variant. However, the upbeat NFP data boosted the market sentiment and extended support to the US dollar.

At home, fishermen eked out pessimism over Brexit deadlock. And Senior members of Boris Johnson’s Conservative Party urged challengers to the prime minister to rein in their ambitions and focus instead on steering Britain through the biggest plunge in living standards in a generation.

Johnson had apologized after he and staff held parties during strict coronavirus lockdowns, at a time when many people could not say farewell in person to dying relatives, events that are being investigated by the police.

He further angered colleagues last week when he falsely accused the leader of the opposition Labour party of failing to prosecute a child sex abuser when he was in charge of public prosecutions. That, critics said, shows Johnson is incapable of changing, or showing true remorse.

As per a recent news, “Boris Johnson has been warned by Jet2 that the UK is falling behind in the race to decarbonise the aviation industry and is failing to recognise its true potential.”

Investors are now waiting for the U.S. inflation data, including the consumer price index, due on Thursday. A strong reading could escalate bets of a Fed interest rate hike in March 2022.

GBP/USD 4 Hour Chart:

Support: 1.3482 (S1), 1.3439 (S2), 1.3373 (S3).

Resistance: 1.3592 (R1), 1.3658 (R2), 1.3702 (R3).

The strong NFP data along with other catalysts favoring the greenback against the sterling, we expect a bearish trend for GBP/USD.