The US dollar was seen moving weakly, failing to continue its gains in last weekend’s trading session connecting to the start of this week’s Asian market opening session.
Analysts assess the US dollar's depreciation that took place was driven by profit-taking factors after the strengthening displayed by the US dollar in previous trades.
Still, with market sentiment still risky, analysts expect the US dollar to potentially continue to strengthen again in trading this week.
The focus will be on the Federal Reserve (Fed) which is expected to raise interest rates by 75 basis points at next week’s FOMC meeting, for the same hike for the second time in a row as part of the central bank’s aggressive measures to fight higher inflation.
As for the Pound, investors will be waiting for the release of UK employment sector data on Tuesday and UK inflation data on Wednesday which will provide an early indication for the Bank Of England's (BOE) action in setting monetary policy at a policy meeting in early August.
If you look at the movement on the price chart of the GBP/USD pair, the end of last week's trading session saw the price rise again after hitting the latest 2 -year low on Wednesday.
The price which hit the latest low at around 1.17600 rebounded above the 1.18000 level before passing the Moving Average 50 (MA50) barrier on the 1 -hour time frame on the GBP/USD chart for an early signal of a bullish trend change.
Continuing in earlier trading this week, the Pound managed to continue its strengthening momentum against the US dollar which continued to weaken for the price to rise above the 1.18800 level.
If the successful rise in the price continues, the price that breaks the resistance zone at 1.9400 is seen to test the focus zone at 1.2000 for a bullish move to higher levels.
On the other hand if the Pound fails to continue strengthening and returns to display a bearish trend pattern on the price chart, a re -decline below the MA50 level will trigger expectations for further declines to record the latest lows again.
The important support zone below 1.18000 will be an important area for investors to assess whether the price will fall lower or return to signal for a rebound.
