The Pound currency is seen to experience a more severe fall in value towards the end of the week, but is seen to be more influenced by the renewed pressure of the strengthening of the US dollar which had previously calmed down a bit after the publication of the minutes of the FOMC meeting.
The US dollar continued to strengthen until the end of this week's trading as investors digested statements by several Federal Reserve (Fed) policy makers regarding the need to continue raising interest rates further to control high inflation.
This is seen to change investors' views on the published FOMC meeting minutes which are more dovish with the expectation that the Fed will slow down interest rate hikes at the September FOMC meeting.
But after the publication of the latest United States (US) economic data published earlier also showed positive figures, also supporting the expectation that the Fed will continue to raise aggressive rates.
In a statement by St Louis Fed President James Bullard, he said he supports making an aggressive interest rate hike of 75 basis points for the third time in a row in September.
In addition, the President of the San Francisco Fed, Mary Daly stated that the rate will be slightly above 3% by the end of this year and higher in 2023, therefore an increase of 50 or 75 basis points next month is reasonable.
Therefore, the price movement on the price chart of the GBP/USD currency pair has shown the price falling to a lower level, recording a recent 4-week low.
The price drop finally managed to break through the 1.2000 support zone with a daily drop of around 160 pips recorded yesterday to continue the previous bullish movement pattern after the price bounce that happened last Tuesday failed to continue.
If we examine the price movement on Thursday yesterday, the price tested the support of 1.20000 before bouncing in the European session. However, gains were blocked by the 1-hour Moving Average 50 (MA50) barrier level on the GBP/USD chart before more aggressive declines continued until the end of the New York session.
Hitting recent lows, the price has reached the 1.19400 concentration level before the slowdown in the vicinity continued at the early opening of the Asian session this morning (Friday).
Although at a slow tempo, the price is still seen to be showing a downward pattern that continues to head towards the next concentration level at 1.18800.
If the price manages to extend further lower decline, the support zone at 1.18000 will be the main focus that will be tested by the price as well as record the latest lowest level of the week.
However, it is seen that investors will also be on guard in case of profit taking activities in the final trading session of this week which could trigger a change in price direction again.
If the price increase happens, the price will test the initial barrier level at 1.19400 before retesting the 1.20000 level which will form the latest SBR (support become resistance) zone for the price.
After investors assess the next bullish trend change signal will increase the price up to the resistance level of 1.21000 on the continuing uptrend.
