The US dollar moved quietly in the trading session early yesterday (Monday) until it continued on Tuesday giving room to other major currencies including the Pound to make gains for a while.
The focus yesterday was on the announcement of the appointment of the new Prime Minister of the United Kingdom (UK) which is Liz Truss defeating her challenger Rishi Sunak to replace the post left by Boris Johnson.
Wasting no time, Liz Truss appeared ready with a $130 billion stimulus plan to overcome the energy price spike crisis in the UK and was seen lending support to the Pound's appreciation in the Asian session this morning.
The increase of the Pound was also driven by the depreciation shown by the US dollar which was seen to fail to maintain the strengthening last week after the publication of the US NFP employment data report.
Investors are now looking forward to the release of US manufacturing sector data from the ISM survey, which will be the focus of the New York evening session and is expected to influence the movement of the US dollar to become an investor's assessment.
Looking at the price movement on the chart of the GBP/USD currency pair, there are indications of a trend change on the price bounce in early trading this week.
At the opening of the Asian trading session yesterday, the price initially shrank until it touched the price support level of 1.14500, recording the latest lowest level in 2 years, since March 2020.
However, continuing to the European trading session, the price started to bounce back up and test the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the price chart until the end of the New York session.
Continuing at the opening of the Asian session this morning, the price continued to surge past the MA50 barrier with an increase of around 90 pips until it touched the barrier level of 1.16000 to signal the movement of a bullish trend is about to begin.
If the price succeeds in breaking through the resistance at 1.16000, it is expected that the price will continue to surge past the 1.16500 level with the target to reach the support become resistance (SBR) zone at 1.17600-1.18000.
On the other hand, if the price fails to break through the 1.16000 barrier level, it is likely that the decline will occur again for the price to test the MA50 support level before giving an indication of the direction of further price movement.
If the price signals bearish again with a drop below the MA50 level, the price will once again test the 1.14500 support level hit yesterday before making a fresh 2-year low in a continuing bearish pattern.
