The Bank of England (BOE) sparked a shock in the market when it decided to raise interest rates to 0.25% from 0.10% at yesterday’s policy meeting.
A majority of meeting members voted for the rate hike after recently published inflation data soared to its highest level in a decade.
Subsequently, investors have already started placing confidence for the strengthening of the Pound earlier and subsequently continued the strengthening after the hawkish decision of the central bank.
With the Pound strengthening against the US dollar, the price on the GBP/USD currency pair chart on Thursday has soared up to 200 pips starting from the reaction of the FOMC meeting decision.
The rally until yesterday's New York session has reached the resistance level of 1.33700 but again closed lower trading again around the level of 1.33000.
The slow return price movement continued in the Asian session on Friday morning. However, the bullish pattern exhibited signals for the expectation of a bullish trend to continue.
The next rise is seen to test the 1.34000 resistance zone to reach the latest 3 -week high.
Yet while the BOE has sparked a push for the Pound to strengthen, let’s not forget the Federal Reserve (Fed) has also given a more hawkish signal to tighten its policy.
Therefore, investors are likely to see the strengthening of the US dollar anytime after this.
The strengthening of the US dollar against the Pound will re -push the price below the 1.33000 level and break the Moving Average 50 (MA50) support on the 1 -hour time frame for a clearer bearish trend signal.
The decline will re-test the 1.32000-1.31700 support zone which still managed to be a price supporter of the lower decline.
