Opening early trading on Monday yesterday, the Pound failed to absorb the pressure of the strengthening US dollar which continued the momentum of last week.
Both currencies are expected to be volatile this week in the face of the results of their respective central bank meetings on Thursday.
The Federal Reserve (Fed) and the Bank of England (BOE) are both expected to raise interest rates by 75 basis points for the latest policy meeting which could have a positive impact on the Pound and the US dollar.
Looking at the price action on the chart of the GBP/USD currency pair yesterday, the price hovered slowly at the 1.16000 resistance zone and then plunged more than 100 pips to the 1.15000-1.14500 focus zone.
Tracking to the RBS (resistance become support) zone, the price started to slow down at the end of the New York session continuing into the beginning of the Asian session this morning (Tuesday).
The price movement is seen to give a bearish indication when it moves below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the GBP/USD chart.
If the US dollar continues to strengthen and prices continue to decline below the RBS 1.15000 zone, the next target is around 1.13000 with an additional decline of around 200 pips to reach that level.
Next, the focus levels in the previous weeks such as 1.12000 and 1.11000 will again become targets for continued decline.
However, if the price successfully bounces back from the 1.15000 zone, crossing the MA50 barrier will give an early signal for the price to continue the bullish trend movement with a target towards the 1.16000 resistance zone.
Breaking through that resistance will record a new 10-week high with a target of 1.18000.
