Fears over a new Brexit deadline got traders selling the pound today. I still expect GBP/AUD to extend its uptrend, however. Here’s what I spotted on the 1-hour chart!
Fresh Market Headlines & Economic Data:
- Kudlow: “The deal is absolutely completed.”
- UK financial system seen as resilient to Brexit, trade wars
- Bank of England tweaks rules to give banks £500 billion loan warchest
- Asian financial firms face ‘benchmark-aggedon’ as tough EU rules near
- Westpac: NZ consumer confidence up 6.8 points in December
- NZ business outlook jumped 13 points, services and manufacturing most upbeat sectors
- BOJ’s next move to dial back stimulus, most economists now say: Reuters poll
- Meeting minutes: RBA to “reassess” outlook in February, “prepared to ease” further if needed
- Brexit bill to block further delay to transition
- Pound falls on report Johnson planning new Brexit deadline
Upcoming Potential Catalysts on the Forex Calendar:
- Italy’s trade balance at 9:00 am GMT
- U.K.’s employment data at 9:30 am GMT. Here are points you need to know!
- Euro Zone’s trade balance at 10:00 am GMT
- U.K. CBI industrial order expectations at 11:00 am GMT
- Canada’s manufacturing sales at 1:30 pm GMT
- U.S. building permits and housing starts at 1:30 pm GMT
- U.S. industrial production and capacity utilization rate at 2:15 pm GMT
What to Watch: GBP/AUD
GBP bulls got spooked earlier today when word got around that Boris Johnson and his friends are amending the Brexit bill to NOT allow further extensions. This means that, once the government has set a deadline, the U.K. must stick to it with or without a trade deal with the EU. Duhn duhn duhn.
AUD isn’t faring any better after RBA’s minutes hinted that central bank members could ease further as early as February.
For now, I’m optimistic that Boris’ recent landslide win would allow for speedier decision-making and maybe clearer Brexit conditions. This is why I’m looking to enter GBP/AUD’s uptrend as soon as I see momentum on the 1-hour chart.
It also helps that the trend is still overwhelmingly “bullish” across MarketMilk’s moving averages:
There are no signs of potential support from the recent downswing just yet, but I’m looking at the 200 SMA near the 50% Fib for potential entry and then use the 1.9540 zone as an initial target area.
I would also consider trading a channel support play if GBP/AUD drops back down to the 1.9175 previous area of interest.
Here’s GBP/AUD’s ATR if you need help placing your stops: