Following the decline of the US dollar on Wednesday's trading yesterday, which failed to maintain the momentum of the previous day's strengthening, there was room for the Pound currency to rise.
The pound managed to perform better after the UK inflation data published at the beginning of the European session yesterday signaled a slightly lower than expected inflation reading.
Rekindled expectations for the central bank of England (BOE) to slow aggressive interest rate hikes following the drop in inflation.
The US dollar was seen to fail to continue strengthening yesterday as shown when the United States (US) inflation data was released last Tuesday which reassured investors that aggressive rate hikes by the Federal Reserve (Fed) will continue for the third time in a row at the FOMC meeting next week.
On the chart of the GBP/USD currency pair, it can be observed that the drastic decline of up to 250 pips last Tuesday did not continue on Wednesday yesterday.
The price on the other hand bounced back around 100 pips, but failed to break through the resistance at the 1.16000 level.
The price also did not cross the barrier level of the Moving Average 50 (MA50) on the 1-hour time frame on the GBP/USD chart, and still signals a bearish movement for the price.
The price drop is likely to continue to test the support zone at 1.14500-1.14000 which was tested last week.
The drop in prices to the zone last week has recorded the lowest level that prices have been tracked since 1985.
While for the expectation of a price increase, passing the MA50 barrier and the 1.16000 level will give an early indication of a bullish trend change.
The next extended rally is expected to break above the 1.16500 level before heading to a higher focus resistance zone at 1.18000 to record a recent 3-week high.
