The pound stole the show in Wednesday's trade yesterday when it was among the standout currencies as other major currencies traded gloomy following the pressure of the strengthening US dollar situation.
A strengthening of the Pound was on display at the start of the European session yesterday as markets reacted to UK inflation data being published higher than forecast.
This gives early expectations for the central bank to continue tightening monetary policy while providing support to the Pound as the attraction to the currency begins to increase.
It can be observed that the price movement on the chart of the GBP/USD currency pair shows a sign for a trend change to occur.
After the decline from the previous day continued in the Asian session, the price touched the support level of 1.26000 and then jumped 100 pips after the inflation data was published.
The price rally almost touched the 1.27000 level but the price pulled back in the New York session and hovered around that level at the end of the session.
However, what made investors cautious was that the continued price movement in the Asian session this morning (Thursday) was seen to be above the Moving Average 50 (MA50) support line on the 1-hour time frame on the GBP/USD chart, signaling early for a trend change.
A higher increase will be expected if the price that tested the level of 1.27000 today manages to break through it.
The target is for the price to move towards the 1.28000 resistance zone which was the focus of trading at the end of December.
However, if the resistance of 1.27000 fails for the price to overcome, there is a possibility of a decline to return to the current support zone which is at 1.26000 which was tested yesterday.
If the penetration is lower, a more clear bearish movement will be displayed for the target price up to around 1.25000.
See the picture of the GBP/USD pair price chart below for your technical analysis reference.
The chart displayed above uses the SaracenMarkets platform, open your trading account at SaracenMarkets today. – CLICK HERE – START TRADING NOW
