BoE day has arrived, with the potential for significant volatility in sterling crosses. In addition, some of this may spill over to euro pairs depending on the actions taken by Mark Carney and his team.
GBP/USD caught in a bearish trendJuly’s tale has been replicated in August, namely that $1.34 continues to be too much of a barrier for upside progress here. The pair remains stuck in a bearish trend, with little sign that a real upward move is on the cards – today’s Bank of England meeting has certainly stayed the hand of sterling bulls, with the ongoing tide of negative data not helping matters.
A significant dovish shift on the MPC today might see the pair head down towards $1.32, and then on to possible support around $1.3050.
EUR/USD weakness looks to bring out the buyersThe pair has yet to regain the heights seen earlier in the year at $1.15, and yesterday’s sharp reversal suggests a period of USD strength may be in the offing. As a result we could see a move back to the 200-day simple moving average ($1.1078), and then perhaps down to the late-July low around $1.0950.
Nevertheless, buying the dips has been the approach to take here since February, with sustained weakness likely to bring out fresh buyers.
AUD/USD gains stallAUD/USD gains have stalled since late June around $0.76, with the past few days repeating that pattern. Nonetheless, for now the uptrend goes on, so weakness back in the direction of $0.74 could see fresh buyers emerge.
There is a clear amount of resistance from $0.76 to $0.77, with a break above the latter potentially heading towards the mid-April highs at $0.7850.
