GBP/AUD – Headed Below 2.04?

GBP/AUD – Headed Below 2.04?

GBP/AUD – Headed Below 2.04?

The main focus for the next 24 hours will be on the British pound and the Australian dollar. The Bank of England has a monetary policy announcement and Australia will release its latest employment rate. Based on the recent trend of U.K. data, the BoE has a lot to be worried about and we believe there’s just very little will within the central bank to raise interest rates this year. Fresh concerns about low commodity prices and market volatility could send GBP to fresh multi-year lows. Australia’s employment report will be released before the BoE rate decision and while economists are looking for job losses in December, the uptick in the employment component of manufacturing and service sector PMIs point to a positive surprise.

Fundamentally GBP/AUD should head lower and technically we are looking for the currency pair to re-test 2.05 and slip as low as 2.04. The 200-day SMA near 2.07 serves as key resistance but below we have the 23.6% Fibonacci retracement of the 2013 to 2015 rally near 2.05.

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