Investors' expectations of a bearish price on the chart of the GBP/USD currency pair have been misplaced as prices have surged sharply as trading nears the end of the week.
This is due to the follow-up effect of the publication of the consumer price index (CPI) data of the United States (US) showing a decreasing figure, showing the effect of the previous tightening of policy by the Federal Reserve (Fed).
The decline in the US inflation rate for 4 consecutive months has prompted a significant depreciation of the US dollar in the New York session yesterday and has given room for the Pound to trade higher again.
The focus will be on the release of UK economic growth data in the European session soon which is expected to drive the Pound's movement at the end of the week.
After a bearish pattern was exhibited last Wednesday on the GBP/USD chart to a level around 1.13400, investors are starting to see signals for a change in the downward trend for prices.
However, expectations failed and what surprised the market on Thursday yesterday, the price has jumped up to 370 pips!
The rally that broke through the 1.15000 level and the 1.16000 resistance finally reached a height around 1.17300 at the end of the New York session.
This is the highest price reached in the last 8 weeks.
It is not impossible for the price to continue the climb with the latest target likely to reach around 1.18000 for the price to test the concentration zone.
And for a higher increase, the level around 1.18800 is expected to test the price if the bullish movement is still successfully maintained.
On the other hand, a price drop can also occur especially when trading closes at the end of the week with the possibility of profit taking activities by market players.
If the price plunges again below the 1.16000 zone, the price is seen to drop to around 1.15000 first before the price reaction in that zone will be an indication for further movement.
The price could reach back to the support level earlier in the week at 1.13000 if the decline continues.
