The Pound Sterling last week traded gloomy as the focus was on the release of UK jobs data and inflation which failed to have a significant impact on the market.
Although UK inflation jumped to a 41-year high of 11.1%, the Pound was not seen strengthening as the US dollar traded weakly last week.
Developments in the UK were also watched by investors after Finance Minister Jeremy Hunt announced a £55 billion tax increase in his budget presentation in Parliament.
A factor that is likely to increase pressure on the Pound this week is the expectation that the US dollar can strengthen again following the news of a 5-day movement restriction in Guangzhou due to fears of the spread of Covid-19.
Looking at the price chart of the GBP/USD currency pair, the price reached a 13-week high last Tuesday at the 1.2000 zone.
However, continuing to trade until the end of the week, the price started to level off again below 1.19400 and was seen to also go down testing the support zone at 1.18000.
Still hovering in that range continuing earlier this week's trading, prices dipped slightly at the opening of the Asian session this morning and are below the Moving Average 50 (MA50) barrier on the 1-hour time frame on the GBP/USD chart.
The initial signal of bearish movement will push the price down to retest the support zone at 1.18000 for investors to assess the price reaction at that zone.
If the price continues to decline and break through the 1.18000 zone, a lower decline will be expected to test the RBS (resistance become support) zone at 1.16000.
On the other hand, if the price bounces at the 1.1800 zone and makes another rally, the resistance at 1.19400 will be tested before the price heads back to the 1.2000 resistance zone last week.
Successfully breaking through the resistance will push the price to record the highest level since mid-August last year.
