The consumer price index (CPI) data of the United States (US) in the New York session yesterday has given a big blow to other major currencies in the market.
This is because the US dollar has significantly strengthened following the annual US CPI reading for September which remained at 3.7%, missing expectations for a 3.6% drop.
As was the case with the Pound, a daily plunge of up to 160 pips was seen on the chart of the GBP/USD currency pair yesterday.
The UK economic growth data published in the European session is seen to fail to support the Pound instead, the price movement is more driven by the US CPI data in the following session.
At first the price hovered around 1.23300 before significantly falling below the 1.23000 level until breaking through 1.22000.
The lowest level reached at the end of the session was around 1.21700, but the price rose again slowly to the level of 1.22000 in trading in the Asian session this morning (Friday).
With yesterday's plunging pattern, the price is seen to continue to decline further after the signal of a change in the bearish trend of the price falling below the Moving Average 50 (MA50) barrier on the 1-hour time frame on the chart.
A further drop in price is expected to test the concentration zone at 1.21000 which was price support at the end of the previous week.
However, it is not impossible for the price to return to show an increase again with the target to test the 1.23000 level again.
Crossing the MA50 barrier will give an early warning for the possibility of a price trend reversal.
