Price movements on the chart of the GBP/USD currency pair were closely monitored by investors yesterday due to the publication of two important data, the UK employment data in the European session before the main focus shifted to the United States (US) inflation data in the New York session.
Wage growth in the UK is seen to slightly slow down plans by the central bank of England (BOE) which has signaled an end to its monetary policy tightening.
Markets expect the BOE's choice to raise interest rates by 25 basis points at its March meeting.
The pound showed no significant movement after the data was published, but it was a different story for the US dollar which reacted to the release of the US inflation data.
The US annual inflation rate for January recorded 6.4%, a figure higher than the expected 6.2%.
The latest decline in inflation from the previous 6.5% is seen as slower and likely to make it harder for the Federal Reserve (Fed) to slow down their policy tightening.
On the GBP/USD chart, there was a volatile price fluctuation in the New York session with the latest high successfully reached at 1.22700.
However, the price also plunged 150 pips before closing the end of the session at around 1.21700.
The Moving Average 50 (MA50) level is seen to still support the price from falling lower on the movement in the H1 timeframe, showing that the price still has the potential to continue rising.
However, if the US dollar succeeds in strengthening and pushing the price lower, the drop is likely to go to the 1.21000 level before dropping lower after a more bearish trend change signal.
The decline will continue towards the concentration zone at 1.20000 or last week's lowest level around 1.19600.
On the other hand, if the price manages to bounce back to resume the previous rising pattern, crossing the 1.22000 level will see the price challenging the height reached yesterday.
Next, for a clearer display of bullish trend movement, the price can go to the 1.23000 level and potentially reach the height of the previous resistance zone of 1.24000.
Today's European session will be focused on the publication of UK inflation data which is expected to have a significant impact on the movement of the Pound leading up to the end of this week's trade.
