Planning on staying away from the dollar today?
I gotchu! Let’s take a look at GBP/AUD possibly breaking above a triangle consolidation.
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/CAD’s downtrend pullback as the BOE scrambled to contain the bond market rout. 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:
IMF keeps 2022 global GDP growth forecast at 3.2%, cuts 2023 projection and warns of global recession
Fed’s Mester says there’s been no progress on inflation, so interest rates need to move higher
China steps up anti-COVID measures in megacities as infections mountJapan’s core machinery orders post 5.8% decline, the biggest fall in 6 months
Japan Reuters Tankan index hits 5-month low of 5 in Oct
JPY weakens to fresh 24-year low past 146.00 vs. USD
Biden says he doesn’t think there will be a recession, if so it will be ‘very slight’
Asia stocks stumble as China COVID, sterling wobbles shake sentiment
UK economy unexpectedly shrinks in August, falls by 0.3%
UK trade deficit widened to 7.1B GBP in August from a downwardly revised 5.4B GBP in July
UK industrial output dropped by 1.8% following 1.1% uptick in July
BoE signals to lenders it is prepared to extend bond purchases – FT
Upcoming Potential Catalysts on the Forex Economic Calendar:
BOE’s FPC statement and meeting minutes due today
Eurozone’s industrial production at 9:00 am GMT
U.S. PPI reports at 12:30 pm GMT
ECB Pres. Lagarde to give a speech at 1:30 pm GMT
FOMC meeting minutes at 6:00 pm GMT
UK’s RICS house price balance at 11:01 pm GMT
Japan’s PPI reports at 11:50 pm GMT
AU MI inflation expectations at 12:00 am GMT (Oct 13)
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
In case you missed it, Financial Times has reported that the Bank of England (BOE) has privately signaled major bankers that it could extend its bond-buying programme beyond this week’s deadline.
This comes after BOE Governor Andrew Bailey warned pension funds that they “have three days” before the buying ends.
Speculations of further support from U.K.’s central bank helped lift GBP against its major counterparts.In GBP/AUD’s case, the news was enough to push the pair from its daily lows near the 1-hour chart’s 100 SMA to a descending trend line resistance near 1.7650.
Will talks of bond-buying be enough to push GBP/AUD from its triangle consolidation?
After all, AUD is already getting less support thanks to a less hawkish RBA and new COVID measures in China (Australia’s largest trading partner).
If we do see an upside breakout, then you gotta eye the 1.7800 psychological handle that hasn’t been broken as resistance since late March this year.
If the triangle resistance holds, though, or if traders go back to hating on GBP, then you should also be ready to sell GBP/AUD all the way back to its 100 and 200 SMA support.
What do you think? Will we see a breakout today?
