GBP/AUD hits the top of the watchlist right from the jump as the pair sets up for a potential breakout with top tier catalysts ahead from both Australia and the U.K.
Triangle Break on GBP/AUD?
This week could finally be the one where we see currencies jumping with multiple top tier events ahead!
More specifically, we’ll be checking out GBP/AUD as we’ve got the latest monetary policy decisions from both the Reserve Bank of Australia and the Bank of England this week, and while no changes are expected to monetary policy from either central bank, any changes to rhetoric could spark a big move in GBP/AUD.
This week we’ll be on the look out for comments that may suggest tapering could be on the way, given the improving business & consumer sentiment data (Australia’s manufacturing goes from strength to strength in April 2021), as well as inflation pressures on the rise (UK inflation rises to 0.7% in March as clothing and fuel prices grow).
If one central bank hints at tapering while the other doesn’t, that would be a scenario that potentially leads into a break of the symmetrical triangle pattern seen in the four hour chart above, and possibly momentum move thereafter. If that scenario plays out, look to setup a swing / longer-term idea to ride a likely new trend with legs to go pretty far depending on the level of optimism from one central bank relative to the other.
If both central banks signal a taper, a solid triangle break is less likely. More likely would be increased volatility for the pair with the previous majors swing highs/lows as potential opportunities for a mean reversion play to target the current consolidation area around 1.7950.
What do you all think? Will the central bank events lead to a jump in volatility for both currencies? Or will they both be a dud? Let me know in the comments section below!
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