At first it was expected that the price would recover, but the situation changed for the worse on the chart of the GBP/USD currency pair yesterday following the turmoil in the New York session.
Influencing price movements is the release of inflation data from the United States (US) which is the main focus this week, with annual inflation readings in July rising to 3.2% compared to 3.0% previously, but slightly missing the forecast of 3.3%.
The US dollar, which initially weakened when the data was published, made the price jump above last week's high at 1.27900 and then reached the 1.28000 level.
Not long after, the US dollar strengthened again and put pressure on the Pound currency with the price plunging around 150 pips!
The decline also broke through the support level at 1.27000 and reached around 1.26700 at the close of the New York session.
The horizontal price movement around that continued trading in the Asian session this morning (Friday) with a bearish signal after the price was back below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the GBP/USD chart.
Further declines will be expected to head towards the support zone at 1.26000 to record a recent 6-week low.
However, if the price bounces back above the 1.27000 level and also breaks through the MA50 barrier, a bullish pattern can be expected at the close of the final sessions for this week.
The upside could lead back to the 1.28000 zone, but it is likely to be difficult as the tendency for the US dollar to strengthen will limit the gains.
Investors will look forward to the release of UK economic growth data in the European session which will influence the Pound currency, before in the New York session, the focus will be on US producer inflation (PPI) data and US consumer confidence sentiment.
