The US dollar plummeted after the publication of the United States (US) inflation data in yesterday's trading session in New York again opening up room for the increase of other major currencies including the Pound.
The US consumer price index in July contracted less than expected with the annual reading showing a decline to 8.5% lower than June's 9.1% for a 40-year record high. This data is also lower than the inflation level for last May and June.
Indicators of declining US inflation show the effectiveness of policy tightening measures by the Federal Reserve (Fed) and increase expectations for the Fed to continue raising 75 basis points at the September FOMC meeting, but there are also views that the Fed will slow down interest rate hikes.
The next focus will be on the US producer price index (PPI) data that will be published in the New York session tonight with an expected decline in the latest data reading.
And at the end of the week, investors pay attention to the release of UK gross domestic product data to assess the economic growth of the United Kingdom (UK) which will affect the movement of the Pound in the final trading sessions of this week.
Measuring the value of price movements on the GBP/USD chart, prices are seen to have exhibited drastic movements yesterday after the market's reaction to the release of the US inflation data.
The price is seen to have managed to make a jump of 200 pips and break through the concentration barrier level at 1.22000 until it reaches a high level around 1.22750.
However, after the price spike happened, the price shrank again to close the trade lower towards the 1.22000 zone and the price remained hovering around that continued until the trading session of Asia this morning (Thursday).
If the price increase continues successfully, the price is seen to jump from the 1.22000 zone with the target to head towards the concentration resistance zone at 1.23000 after overcoming the high level reached yesterday.
The price increase that successfully passed the resistance is seen to test the next concentration level at the height of 1.24000 to record the latest 8-week high level.
However, if the price decline is displayed in today's trading, the price will be expected to decline towards the 1.21000 level again and test the Moving Average 50 (MA50) support level for investors to assess the trend change signals for further price movements.
The lower decline will continue to target the 1.20000 level which is the focus zone for the price which was also tested in the price plunge at the end of last week, but the price has not yet managed to break through it to reach a lower level.
