The focus of the early trading opening of the European session today was on the release of a report of UK inflation data which has influenced the price movement for the Pound.
UK inflation for the April reading jumped to 9% surpassing last March's reading of 7%, recording the highest rate of inflation in 40 years!
The increase was actually expected following a spike in energy costs last month in the wake of the Russian-Ukrainian war conflict.
This situation is seen to have an impact on the Pound which is expected to strengthen as the central bank will act to further tighten monetary policy to offset the rising inflation rate.
Yet the initial reaction by the Pound currency after the data was published was negative by displaying depreciation.
On the price chart the GBP/JPY pair has seen the rise on Tuesday yesterday has reached to the focus zone of 162.00 after the published UK employment data report was encouraging and supported the Pound currency surge.
But after the flat in the zone continued until the Asian session this morning (Wednesday), the price has made a decline at the beginning of the European session after the reaction to the published data.
Will the price signal for a bearish movement again?
At the beginning of the week the price has shown a bullish trend change signal on the GBP/JPY chart after moving above the 157.00 level and is also supported by the Moving Average 50 (MA50) support level on the 1 hour time frame of the price movement.
If today’s decline fails to pass below the MA50 support level, the price is likely to continue its rise for a signal to continue the previous bullish trend.
The bulls are expected to break the 162.00 zone before heading to the next resistance zone which is around 164.500.
However if the price continues to decline below the MA50 level for an indication of a bearish trend change, the decline is seen to return to the focus zone earlier in the week around 157.700.
The extended decline will reach last week's price support zone at 155.70 and will test that important zone.
