Following the poor performance exhibited by the US dollar currency since the beginning of the week has opened the way for other major currencies including the Pound to continue strengthening until yesterday.
The dollar index that shrank lower to 107.00 in the European trading session yesterday has made the US dollar continue to decline lower in addition to the positive movement of US stocks adding pressure to the US dollar.
The Pound showed a positive movement yesterday on the strength of the Euro after the European central bank's report to raise interest rates higher than previously expected.
However, there was little to limit the strengthening of the Pound when the publication of the UK employment data report showed a rather bleak overall reading. After this, the focus of investors will be focused on the publication of annual UK inflation data in the European session shortly.
There are also reports that Bank of England (BOE) Governor Andrew Baily is backing for a 50 basis point hike at the latest meeting due to the risk of inflation which is currently at 9.1%. This is an additional factor to support the strengthening of the Pound ahead of the policy meeting in early August.
Looking at the price chart of the GBP/USD currency pair, the price managed to continue its increase yesterday although the rate of increase compared to the beginning of the week was slightly reduced with yesterday's daily increase recorded around 120 pips.
After recording the latest high level almost touching the 1.20500 level, the price is seen to shrink again at the end of the New York session to hover slowly in the 1.2000 zone until the trade that continues into the Asian session this Wednesday morning.
Analysts assess that the price movement is still moving in a bullish trend with the price remaining above the Moving Average 50 (MA50) support level in the 1-hour time frame on the GBP/USD chart after the price broke through that level at the end of last week.
If the price manages to sustain a move above the 1.20000 level, it is likely that a higher rally will be expected to overcome yesterday's highs to record a new weekly high.
A higher move is expected to test the resistance at 1.21000 before the price next targets the 1.22000 zone to record the latest high in the 3-week trading period in a sustained bullish trend move.
On the other hand, if the price fails to maintain the positive momentum, investors should be prepared to witness a further decline in price again if the price starts to move below the MA50 support level and is seen to test the 1.19400 level.
The price that continues to decline further will test the concentration level around 1.18800 before the target to return to the 1.18000 support zone again.
