The initial rise in prices can be seen on the chart of the GBP/USD currency pair in yesterday's New York session following the impact of the market's reaction to the published United States (US) inflation data.
The US consumer price index (CPI) was slightly lower than expected and marked the 10th straight month of declining inflation.
The effect of the initial depreciation of the US dollar has shown a jump of almost 80 pips when the price that initially hovered above the 1.26000 level has reached the 1.26800 level.
However, the price was then seen to decline again towards the 1.26000 zone again.
Investors are also wary of the Pound pending the outcome of the Bank of England's policy meeting today, at 7pm local time.
The Bank of England (BOE) is expected to raise interest rates by 25 basis points, bringing the latest rate to 4.50% from 4.25% previously.
The direction of price movement on the GBP/USD chart is likely to become clearer after investors examine the results of the meeting and the central bank's follow-up statement regarding further policy.
In anticipation of the price increase occurring, the price is seen to go to the height of 1.27000 to test the resistance zone.
The rally is likely to continue higher to record a recent 1-year high.
But on the other hand if the price plunges down, a decline lower than 1.26000 will expect the beginning of a bearish movement for the price.
The next level of 1.25000 is seen to be the target for continued price declines.
