The British pound has fallen to a 14-month low and the euro to a 27-month low against the dollar as the weekly jobs data from the US came in stronger than expected, underpinning expectations of a Fed rate hike early next year.
Thursday's data pushed the EUR/USD down 0.87% to 1.2375 and the pair extended the loss to 1.2364, its lowest since August 2012. The GBP/USD had fallen 0.90% to as low as 1.5833 on Thursday and slipped by another 17 pips early Friday in Asia.
The USD index, the gauge that measures the strength of the greenback against a trade-weighted basket of major currencies, has risen above the 88-mark for the first time since June 2010.
The Bank of England and the European Central Bank left policy rates unchanged at the review meetings on Thursday, further strengthening the view that the rate differential of the eurozone and the UK with the US will move more in favour of the US.
The US initial jobless claims for the week to 1 November came at 278,000 down from 287,000 while analysts were expecting a more moderate fall towards 285,000.
The Q3 non-farm productivity rate eased, but less than expected, to 2.0% from 2.9% in Q2. The market expectation was for a sharper fall to 1.5%.
Pound Sterling Aims 1.5750
The pound has broken below the 50-period moving average on a monthly chart and is targeting the 61.8% Fibonacci retracement of March 2013-July 2014 rally at 1.5750. A break of that will open the doors to 1.5230 ahead of 1.4813, last year's low.
Data from the UK was largely mixed on Thursday. The year-over-year rise in the Halifax house prices index for the three months to October was 8.8% down from 9.6% in September and trailing consensus of 9.1%.
However, the month-on-month industrial production growth for September rebounded to 0.6% from 0.0% in the previous month and year-on-year manufacturing output growth came at 2.9% beating analysts' forecast of 2.8%.
Euro Headed Towards 1.20
The common currency has ended all the four months since July down making a cumulative loss of 8.5%. So far in November, the EUR/USD pair has fallen 1.3%.
Technically, the pair is now testing the 50% Fibonacci retracement of the 2000-2008 rally on the monthly chart, which comes near 1.20. The pair had tried to break the same support line thrice since 2008, and therefore the fourth attempt could be significant.