GBP/AUD Headed Back to 2.13

GBP/AUD Headed Back to 2.13

GBP/AUD Headed Back to 2.13

Sterling performed well today despite the lack of U.K. or U.S. data. The gains for the currency pair were swift once the 1.5570 level was broken. Last week the changes to the Bank of England’s economic forecasts suggests that the central bank is in no rush to raise interest rates. For the past few months we have been saying that the BoE will raise rates in 2016 and our outlook has not changed. The most important thing to remember is that while the BoE is in no rush to tighten, they will still be the next major central bank to raise rates and therefore sterling should be bought on dips and not sold on rallies. At the same time, the back to back weakness in Chinese data should limit the gains in the Australian dollar. Ultimately we believe that on a fundamental basis GBP/AUD will rise back to 2.13

Technically, the recent slide in the currency pair has taken GBP/AUD to attractive levels. Not only is the currency pair rising back above the first standard deviation Bollinger Band (a sign of a turn) but it also bounced off 2.08, a level that held as support in July. If the turn gains momentum, it could take GBP/AUD to 2.13

Chart Of The Day

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