The drastic movement in prices displayed by the Pound Sterling in the European session yesterday surprised many investors. What exactly has happened so that the currency is significant?
This was driven by the market reaction to the statement by the Deputy Governor of the Bank of England (BOE), Dave Ramsden yesterday regarding the central bank policy.
He noted that the central bank will not implement negative interest rate measures in the near future as an option. The ‘hawkish’ statement has had a positive impact on the Pound trade.
Thus, the market saw a Pound jump earlier in the week with a daily rise on the GBP / USD pair chart reaching 180 pips above the 1.29000 level.
If you look at the price movement at the beginning of the slow Asian session, but the price is already above the support level of Moving Average 50 (MA50) in the 1-hour time frame of price movement which gives an early signal for the bullish trend to start.
Next, Ramsden’s statement has been the trigger for the start of the uptrend on the GBP / USD chart. Despite this, investors remain vigilant in monitoring the progress of the Brexit negotiations.
The Asian session on Tuesday saw prices hover around the SBR zone (support become resistance) below the 1.29000 level after yesterday's price spike closed again in the lower New York session.
If the bullish momentum continues, the price will move higher with the target level at 1.30000 resistance.
However, if the price returns to lower below the SBR zone 1.29000, the decline is expected to reach the level of 1.27600 which is seen as the RBS zone (resistance become support). The MA50 dynamic support level will also be tested to further strengthen expectations of a bearish trend change again.
Next, the support zone at 1.26700 will be the focus of the continued bearish decline.
