The initial surge in prices on the chart of the GBP/USD currency pair in the European session yesterday failed to continue when the situation changed in the New York session.
The UK jobs report was published with positive readings, supporting the Pound's modest rise in the European session.
Thus, it can be observed that the price increased to a level around 1.26800 but did not have time to touch the target level at 1.27000.
Then, the price has plunged in the trading of the next session following the significant strengthening factor of the US dollar against the published data.
Being the main indicator for the Federal Reserve (Fed), the inflation data of the United States (US) slightly decreased to 3.1% for January (3.4% in December), but did not reach the forecast figure of 2.9%.
The market assessed that inflation rates are still high in the US, reducing expectations for interest rate cuts by the Fed as well as triggering a strengthening reaction of the US dollar.
On the GBP/USD chart, prices are seen plunging below the 1.26000 level.
The price movement was slow until the Asian session this morning (Wednesday) below the 1.26000 level with a bearish price signal identified after the price was below the Moving Average 50 (MA50) barrier on the 1-hour time frame on the chart.
Investors will be alert first for UK inflation data to be published in the European session shortly before in the next session, the speech of the governor of the bank of England (BOE) Andrew Bailey will be watched.
Expectations for a further price drop that will continue will lead to the support zone at 1.25000.
And the price could continue its decline lower if it breaks through that zone and registers a recent 12-week low.
On the other hand, if the price jumps back past the 1.26000 zone and also the MA50 barrier, the price increase is likely to return to the 1.27000 level that was almost reached yesterday.
