GBP/USD plunges below 1.2950 on risk aversion

• GBP/USD battered as China applies tariffs on US goods; Trump reacts aggressively.
• Strong US Nonfarm Payrolls, were a tailwind for the US Dollar and drove the pair lower.
• Traders eyes on Fed Chair Powell speech.

The Pound Sterling tumbles sharply against the US Dollar, falling more than 1% on Friday as risk appetite deteriorates after China imposed tariffs on US goods, which triggered a reaction from US President Donald Trump. At the time of writing, the GBP/USD trades at 1.2947 after hitting a daily high past the 1.31 mark.

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Earlier, China announced that it would impose tariffs of 34% on all US goods as retaliation for Trump's decision. Sterling dropped as it is the most volatile currency amongst G10 currencies, as traders seeking safe havens bought the Greenback, the Yen, and the Swissie.

Data-wise, Nonfarm Payrolls for March in the US exceeded estimates of 135K, with figures rising to 228K, significantly surpassing February's 151K. Although it was a positive number, the Unemployment Rate edged up from 4.1% to 4.2%, according to Bloomberg, which noted that "it was mostly a rounding error."

British Pound bulls are eyeing a possible trade deal between the UK and the US. Despite this, market participants had fully priced in 75 basis points of easing by the Bank of England (BoE)

Up next, all eyes are on Fed Chair Jerome Powell's speech. Next week, the UK economic docket will feature Gross Domestic Product (GDP) figures, along with housing data.

Across the pond, the US schedule Fed speakers, the latest Federal Open Market Committee (FOMC) minutes, and the release of inflation numbers on the consumer and producer side.

GBP/USD Price Forecast: Technical outlook

The GBP/USD reversal witnessed on Friday could open the door to challenge the 1.2900 figure. A daily close below the latter will expose the 200-day Simple Moving Average (SMA) at 1.2810, followed by the 50-day SMA at 1.2726.

The Relative Strength Index (RSI) plunged sharply from around 70 to 54, an indication that bears are gathering strength.

On the bullish front, buyers must keep the pari above 1.29, ideally above April 3 low of 1.2968, which could pave the way to test 1.30.