The price chart of the GBP/USD currency pair showed a daily jump of up to 160 pips last Friday as a result of the market's reaction to the published US NFP employment data.
The report that came out with positive figures for the month of December shows that the US economy is still resilient as the majority of the market expects the Federal Reserve (Fed) to move towards the easing phase of monetary policy for this 2024.
The US dollar briefly strengthened as soon as the report was published, but significantly weakened to see a big price bounce on the GBP/USD chart for the last session of the week.
If observed, the price first fell almost to 1.26000 and then bounced up and penetrated the level of 1.27000 to reach the height of 1.27700.
The price retreated back down to the 1.27000 level at the close of the New York session and price action was seen to be slowly hovering around that at the opening of trading earlier this week.
If the US dollar continues its decline, the Pound will have the advantage of increasing its value higher this week.
However, the market is now cautious as the focus shifts from last week's NFP data to US inflation data.
For the expected price increase, a jump from the 1.27000 level has the potential to overcome the height reached last Friday.
Next, the resistance zone is at 1.28000 to be tested before the higher rise will continue.
However, if the price continues to plunge below the 1.27000 level, the price is seen to be more likely to display a bearish pattern towards the price support zone at 1.26000.
The continued lower decline will target the 1.25000 level which was the focus of the price in mid-December trading.
