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We’ve got potential catalysts ahead from Australia, making this range setup on GBP/AUD one to watch for both the bulls and the bears.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/USD as it trends higher, so be sure to check that out to see if there is still a potential play!

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Fresh Market Headlines & Economic Data:

Dow falls 200 points after disappointing jobs data

Pfizer study deals new blow to South Africa’s vaccine hopes

US jobless claims rise to 861,000 as layoffs stay high

Philly Fed Manufacturing Index decreased 3 points to 23.1 in February

U.S. housing starts fell more than expected in January amid soaring lumber prices

U.S. import prices post biggest gain since 2012

ADP Canada National Employment Report: Employment in Canada Decreased by 231,200 Jobs in January 2021

Negative rates may be BoE’s best tool in future: Saunders

Upcoming Potential Catalysts on the Economic Calendar

New Zealand PPI at 9:45 pm GMT
Australia Flash Manufacturing & Services PMI at 10:00 pm GMT
Japan Inflation Rate at 11:30 pm GMT
U.K. Gfk consumer Confidence at 12:01 am GMT (Feb. 19)
Japan Flash Manufacturing & Services PMI at 12:30 am GMT (Feb. 19)
Australia Retail Sales at 12:30 am GMT (Feb. 19)

What to Watch: GBP/AUD

GBP/AUD 1-Hour Forex Chart
GBP/AUD 1-Hour Forex Chart

On the one hour chart above of GBP/AUD, we can see the market spiked higher on today’s session, highly likely on risk aversion sentiment, possibly driven by various news headlines (e.g., Pfizer study deals new blow to South Africa’s vaccine hopesChina Rolls Over $31 Billion in Medium-Term Loans to Banks) and/or inflation fears.

This brought GBP/AUD to a major resistance area around the 1.8000 major psychological level, which has been a turning point in the market in the past, most notably at the beginning of February. Will sellers take over once again and drive the market back to the bottom of the range?

Well, we won’t know in the longer-term, but in the shorter-term, it may be up to broad risk sentiment and the upcoming catalysts from Australia. We’ve got mid-tier economic updates in the form of Australian retail sales and business sentiment data. They’re not usually market movers, but with a big enough surprise, they could sway Aussie traders one way or another.

If you’re a bull on GBP/AUD, the market is currently in your favor, but there is technical risk with it testing 1.8000. But if the Aussie data disappoints and the market holds above 1.8000, we could see a sustained move higher, especially if broad risk sentiment stays negative.

If you’re a bear on GBP/AUD, history is in your corner to argue for reversal at current levels. If the Aussie data is positive and broad risk sentiment flips back to positive, the odds are pretty good 1.8000 will hold as resistance once again. If this scenario plays out, look to put on a swing trade with a good potential return-on-risk if using the bottom of the range as a target and a tight stop above the current market levels.