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With the BOE expected to hike rates again, I’m looking at this potential bullish pullback setup on GBP/AUD.

Will the channel bottom hold?

Before moving on, ICYMI, yesterday’s watchlist looked at AUD/USD’s double bottom ahead of the FOMC decision. Be sure to check out if it’s still a valid play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

FOMC hiked interest rates by 0.25% as expected

Fed hinted at six more rate hikes for the rest of 2022

EIA crude oil inventories posted surprise build of 4.3 million barrels

New Zealand economy expanded by 3.0% in Q4 2021 vs. 3.3% consensus

Australian economy added 77.4K jobs in February vs. 36K forecast

Australian jobless rate down from 4.2% to 4.0% vs. 4.1% forecast

BOJ Governor Kuroda says they will keep easing until inflation target is reached

Upcoming Potential Catalysts on the Forex Economic Calendar:

BOE monetary policy decision & MPC minutes at 12:00 pm GMT
U.S. Philly Fed index at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. industrial production at 1:15 pm GMT

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️

What to Watch: GBP/AUD

GBP/AUD 1-hour Forex Chart

GBP/AUD 1-hour Forex Chart

The Australian dollar got a strong boost earlier on, as the upside jobs surprise led several banks to project more RBA rate hikes later in the year.

You see, the Land Down Under printed a whopping 77.4K increase in hiring, which is more than twice as much as the projected 36K gain for February. To top it off, the previous reading enjoyed a big upgrade from 12.9K to 28.3K.

However, the British pound could also be in for a major bounce, as the upcoming BOE decision would likely come with a rate hike.

Keep in mind that inflation has been running pretty high in the U.K. so policymakers are keen to keep price pressures in check, especially with fuel costs on the rise lately.

With that, GBP/AUD might find buyers at the Fib levels seen on the hourly chart. The 50% level lines up with the 200 SMA dynamic support while the 61.8% Fib is close to the rising channel bottom at the 1.7900 handle.

I’m seeing a fresh bullish moving average crossover that suggests the uptrend is likely to carry on, possibly taking the pair back up to the swing high or the channel top near 1.8200.

At the same time, Stochastic is hovering around the oversold region to reflect exhaustion among sellers. Turning higher would confirm that buyers are taking over.

Just make sure you set wide stops if you’re planning to trade the BOE announcement!