After the published US inflation data rose, the US dollar has exhibited a decline. Possibly the “buy the rumors, sell the news” factor, investors have taken profits for the US dollar’s trading position after expectations of an earlier rise in inflation driven by the release of rising US producer index data last Friday.
Adding to the pressure on the US dollar was when US treasury yields also plunged back to 1.60% after rising initially to 1.70%.
Still, as the US dollar weakened and other major currencies began to rise, the Pound Sterling was seen struggling to rise and failed to maintain the momentum of the surge earlier in the week.
This is due to recent concerns when the Johnson & Johnson Coronavirus vaccine was temporarily discontinued following reports of 6 cases of side effects of blood clots after injections.
The pound sterling, however, managed to strengthen against the US dollar towards the end of the New York session but the rise in prices was seen to be slower.
On the GBP/USD price chart, the price has managed to show an early rise in the European session after the UK Gross Domestic Product (GDP) data was published positive.
However, in the New York session the price has declined to the level of 1.37000 before making a rebound above the support level of the Moving Average 50 (MA50) in the 1 hour time frame of the price movement.
While prices are signaling to resume rising, investors still need to be vigilant as analysts warn for Pound trading that is still risky.
The Asian session on Wednesday saw the price continue to rise testing the weekly resistance level around 1.37700 with a higher rise expected to the SBR (support become resistance) zone of 1.38000.
Beyond that zone, the next bullish target of the price will head to the high level reached last week around 1.39200.
If the Pound moves lower, the price may plunge back to the support level of 1.37000. A lower decline will test last week's support level at 1.36700.
Worse, the price could fall as low as 1.36000 if the Pound continues to depreciate over the weekend.
