I’m looking forward to seeing additional volatility for pound pairs during today’s BOE Super Thursday events. As Forex Gump noted in his Economic Snapshot for the U.K. business conditions and trade activity have deteriorated so there’s a good chance for a downbeat announcement. Brexit concerns could also return, as opinion polls are still showing a split vote leading up to the June referendum.
As for the Aussie, I’m thinking that the selloff after the RBA rate cut might already be overdone and that the currency could take advantage of the rally in commodities from here. Here’s what I’ve got on GBP/AUD.
As you can see from the pair’s 4-hour forex chart above, the longer-term descending trend line is still holding and is currently being tested. This coincides with the 61.8% Fibonacci retracement level and the 1.9750 minor psychological resistance, which seems to be the line in the sand in terms of a downtrend correction.
I haven’t set any actual entry orders yet since I’m still waiting for the BOE events to unfold. More than a dovish statement and MPC minutes, I’m also counting on downgrades to growth and inflation forecasts in their Inflation Report to push this pair back down. I’m planning on shorting below the 1.9600 handle and aiming for the previous lows near 1.8300 with a stop past the 2.0000 mark.
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