The Pound Sterling showed early gains at the opening of the European session yesterday as markets focused on published UK inflation data.
The consumer price index (CPI) in July recorded a figure of 6.8%, slightly higher than the forecast of 6.7%.
However, if observed, the figure actually shows a decrease compared to the previous month's inflation rate from 7.9%.
The pound failed to maintain its excellent performance in the next trading session which was more dominated by the US dollar as investors' attention turned to the FOMC meeting minutes report.
Expectations for monetary policy tightening measures by the Federal Reserve (Fed) continued towards the meeting in September are seen to support the strengthening of the US dollar until the end of this week.
On the chart of the GBP/USD currency pair, the price has successfully made an increase from the 1.27000 level until it reached a height of around 1.276500 in the European session.
However, the price increase failed to continue, seeing the price retreat slightly and finally close the New York session trading around 1.27500.
The price movement however is still above the Moving Average 50 (MA50) support level on the 1-hour time frame on the GBP/USD chart, still signaling for bullish movement.
For that, the price needs to bounce back and make an increase above the height reached yesterday before continuing to higher levels.
The resistance zone at 1.28000 is waiting to be tested by the price after the previous few weeks the zone successfully restrained the rise.
Meanwhile, if the price breaks lower below the MA50 support and then crosses the 1.27000 level, this will warn investors to prepare for a lower price drop.
The decline is seen to lead to an important support zone at 1.26000 which has been tested several times before but has not yet been breached by the price.
