The price chart of the GBP/USD currency pair showed a surge to its latest high yesterday with a daily gain of up to 240 pips!
In yesterday's European session, price movements were still slow with the reaction of published UK employment data seen as having no impact.
But the situation changed rapidly in the next session when the market focus was directed to the latest United States (US) inflation data.
The annual inflation reading fell to 3.2% for October, lower than the forecast of 3.3%, and a slower return from the 3.7% recorded in September.
This has had a significant depreciating effect on the US dollar as well as giving room for the Pound to rise.
Investors will be alert for the movement of the Pound in the European session shortly with the focus being on UK inflation data to be published.
While in the New York session, some US economic data will be observed including retail sales data and the producer price index (PPI).
If you look at the GBP/USD chart yesterday, the price that initially hovered slowly in the 1.23000 zone has then surged to break through last week's resistance zone at 1.24000.
Next, the increase continued until it reached the latest peak at 1.25000 which is also one of the price focus levels.
Reaching that height, the price has registered a new high for a 9-week trading period.
The slow price movement around 1.25000 continued in the Asian session this morning, but investors will expect the move higher to continue with the momentum that was displayed yesterday.
If it breaks through 1.25000, the increase is seen to lead to the height of 1.26000 or further to the 1.27000 zone which was the focus of trading last August.
However, if there is a further decline, the price is likely to react at the 1.24000 zone to indicate further movement.
If it breaks down, the decline could reach around 1.23000 again before a trend change signal will be observed.
