The Gross Domestic Product (GDP) data of the United Kingdom (UK) which has just been published a while ago at the beginning of the European session has supported the strengthening of the pound that has started in the Asian session again, but the momentum is beginning to turn gloomy.
Looking at the data release, the UK's monthly reading of GDP for July rose to 0.2% over June's reading which contracted to -0.6%, but fell short of expectations at 0.3%.
Next, investors will pay attention to the release of the UK employment and inflation data report which will also influence the movement of the Pound throughout this week.
Meanwhile, the central bank of England's policy meeting was postponed to next week due to the death of Queen Elizabeth, but it is predicted that the Bank of England (BOE) will continue to aggressively increase interest rates at next week's meeting if inflation remains at its highest level in 40 years.
Looking at the price action on the chart of the GBP/JPY currency pair, the price recorded a rise to a new high again surpassing the high level reached at the end of last week.
In the last week, the price increase was seen to be blocked at the resistance level of 166.200 which prevented the price from continuing the increase to higher levels.
On Friday, the price that failed to break the 166.200 resistance level was seen falling back to the support level at 164.500 before the price bounced back to close the week-end trading around 165.400.
Giving an early indication of a bullish move this week, prices started trading at the opening of the Asian session this morning by breaking above the Moving Average 50 (MA50) support level on the 1-hour time frame on the GBP/JPY chart.
The price made gains to break past last week's resistance at 166.200 and hit a fresh 12-week high around 167.00 following the release of UK GDP data just now.
However, the momentum of the surge is seen to begin to relax after reaching the latest high level with expectations for the price to return to the 166,200 zone which is likely to be a support level for the price.
The price increase if it continues is seen to go to the height of 168.00 for the price to test again the main resistance zone of this year which was tested in April and also last June, but still the zone has not been successfully broken through.
However, be alert if the price breaks lower below the 166,200 level and crosses the MA50 support level to signal a bearish move for the price after the latest surge momentum at the beginning of the week failed to be sustained.
The continued lower price decline is seen to retest the support level at the end of last week which is 164.500 before further decline can retarget up to the 162.00 zone.
