There were price fluctuations that confused investors on the chart of the GBP/USD currency pair in the New York session yesterday when the inflation data of the United States (US) came into focus.
The latest US inflation rate for December recorded a higher increase than forecast and projected expectations for the Federal Reserve (Fed) to first delay steps to lower interest rates.
Thus, the US dollar has shown a strengthening in the initial reaction of the data being published.
However, the momentum started to fade in trading towards the end of the session causing the direction of the price movement to change.
If observed, the price reached the high level of 1.27800 first which overcame last week's trade.
Then the price plunge took place, seeing the price towards the level of 1.27000 which was the focus of being tested several times from the beginning of the week.
A reaction was observed and once again the level managed to prevent further declines following the release of US inflation data.
The strengthening momentum that the US dollar failed to maintain saw the price bounce back from the 1.27000 level to the height of 1.28000 and resumed trading today (Friday).
The price movement is holding above the Moving Average 50 (MA50) support line on the 1-hour time frame on the GBP/USD chart, which indicates a bullish pattern for the price.
If the increase continues after this, the 1.28000 zone is seen as an important focus to be tested again like the trade at the end of last December.
But if the US dollar is strong again, the price drop is likely to happen again towards the 1.27000 level.
If the support level is finally broken through, the price will drop lower to show a bearish movement towards the target zone of 1.26000.
