There was a change in the price movement pattern on the chart of the GBP/USD currency pair on Wednesday yesterday.
Compared to last Tuesday, the price showed a surge, the increase failed to continue, instead the price began to show a re-shrinking of the market following the strengthening by the US dollar.
Investors are likely to expect a prolonged strengthening of the US dollar after the minutes of the FOMC meeting were scrutinized early this morning.
Some policymakers see the option of a 50 basis point increase in interest rates and most expect 25 basis points.
The increase in interest rates will be continued by the Federal Reserve (Fed) in an effort to achieve 2% inflation in addition to being supported by readings of employment data, economic activity and spending that are currently strong.
After reaching a bullish high on the GBP/USD chart at the 1.21400 level last Tuesday, the decline was re-exhibited to around 1.20350 at the end of the New York session early this morning.
A drop above the Moving Average 50 (MA50) level on the 1-hour time frame on the GBP/USD chart again gives a bearish signal for further price movement.
The price is seen to head towards the 1.20000 zone which was the previous price support to test it again.
A successful break lower would expect the price to head towards the previous week's concentration zone around 1.19000.
However, if the price bounces back, crossing the 1.21000 level and the MA50 barrier will change the expected direction of price movement again.
The rise is likely to continue towards the 1.22000 level before reaching the highs on the previous release of US inflation data around 1.22700.
