The Federal Reserve (Fed) met expectations of raising interest rates by 75 basis points for the second time at the FOMC meeting early Thursday morning, but the US dollar was seen to shrink after the meeting's decision.
Fed Chairman Jerome Powell indicated that aggressive interest rate hikes will continue at the next meeting but Powell also saw the option that the Fed would need to slow rate hikes for the rest of the meeting until the end of 2022.
According to Powell in a follow-up comment after the meeting, the United States (US) is not in an economic recession with US firms continuing to hire more than 350,000 workers each month.
This week the lack of United Kingdom (UK) economic data caused gloomy movements for the Pound currency. In addition, investors are also still on alert for the Bank Of England (BOE) policy meeting in early August trading next week.
Looking at the movement of the GBP/USD currency pair, the price has shown a jump of around 160 pips in New York after the announcement of an interest rate hike by the Fed which saw the US dollar weaken in the market.
The price has managed to break through the barrier level of 1.21000 before continuing the increase up to the latest 4-week high almost touching the level of 1.22000.
Signaling a bullish move, the price increase is supported by the Moving Average 50 (MA50) level on the 1-hour time frame on the GBP/USD chart before the price bounces off that level.
With the surge pattern displayed, it is not impossible for the price to continue rising higher towards the end of the week, but depending on the movement of the US dollar where the focus of investors is directed to the publication of US economic growth data for the second quarter.
If the price continues its rise and breaks through the resistance zone at 1.22000, the price's next target is likely to reach the height of 1.23000 on the continuation of the bullish trend.
For a higher price increase target, the concentration zone at 1.24000 will be targeted for the price to record the latest 6-week high level.
On the other hand, if the price fails to break through the 1.22000 resistance and shrinks again, the 1.21000 level is seen to be the initial focus to be tested before investors assess the price reaction for further price movement indicators.
If the lower price continues to fall, the support level at 1.20000 will be tested first before the price drops further towards the previous concentration levels such as around 1.19400 or 1.18800.
