The value of the US dollar continued to rise after the release of US producer price index (PPI) data in the New York session yesterday (Tuesday) added further indicators of inflation risk for the world's largest economy.
The increase in PPI data for May reached expectations at 0.80% surpassing the previous month’s reading of 0.50%.
The US dollar is expected to continue to strengthen ahead of the FOMC meeting early Thursday morning, with expectations of a rise of up to 75 basis points by the Federal Reserve (Fed).
After the FOMC meeting, investors will focus on the results of the meeting of the central bank of England (BOE) which will affect the movement of the Pound.
The pound was still seen moving weak from last weekend until continuing into the beginning of this week, coupled after investors were shown with UK jobs data declining on issuance in the European session yesterday.
Examining the price movement on the chart of the GBP/USD currency pair, the bearish pattern of the price is still maintained with a significant decline continuing for the third day in a row.
Prices were seen to have made a slight rise in the Asian session yesterday before continuing the decline in the European session continuing until the end of the New York session.
After a 200 pips decline occurred on Friday and Monday earlier in the week, a daily decline of around 270 pips was recorded on Tuesday yesterday extending the bearish momentum to the latest low since March 2020 below the 1.2000 zone hitting the level around 1.19400.
Continuing trading in the Asian session this morning (Wednesday), the price is seen making a slight increase in the Asian Session beyond the 1.2000 zone, but is still seen moving in a bearish trend as the price remains below the Moving Average 50 (MA50) barrier level in the 1 hour time frame. on the GBP/USD chart.
If the decline continues, the price that falls below the level of 1.19400 will lead to the expected level around 1.18000 to continue to record the latest 2 -year low.
On the other hand, if the price increase occurs again, the level of 1.21000 is expected to be the initial resistance to test the price before the resistance level of MA50 will also be tested to give an indication for further price movement.
The price increase that successfully continues past that level will then lead to a higher target level at 1.22800 after the change in the price trend is more clearly assessed by investors.
The outcome of the FOMC and BOE meeting on Thursday will be the driver of price movement this weekend.
