Last Friday, the price on the GBP/USD currency pair chart showed a daily plunge of up to 140 pips!
What actually happened is due to the re-strengthening displayed by the US dollar, it is believed that there was profit taking activity by market players after seeing the king of the currency shrink throughout the week.
A clearer signal was obtained by the market when the inflation data of the United States (US) is decreasing giving the impression that the tightening policy by the Federal Reserve (Fed) is coming to an end.
Therefore, the US dollar is expected to move weakly towards the FOMC meeting at the beginning of May, and open the way for the Pound to continue to rise after this.
However, the focus will be on UK jobs and inflation data this week which will drive the direction for the British currency.
At this point, it is likely that the strengthening momentum of the US dollar will still pressure prices at the beginning of the week.
The price is now hovering slowly in the 1.24000 zone after last Friday's dive into that zone.
The price movement that is below the Moving Average 50 (MA50) barrier also prompts the expectation that the price will continue to decline.
A further drop in price is seen to lead to the concentration zone at 1.23000 which is likely to be a support for the price to bounce back.
If it breaks lower, the price will head to the next concentration zone at around 1.22000.
However, if the price manages to bounce back from 1.24000, the resistance is at 1.25000 to be surpassed before resuming the bullish trend.
The height level reached last week around 1.25400 if successfully overcome will expect the latest high level to be recorded with a target at 1.26000.
