Trading opportunities on currency pair: the growth of the pound has hastened on the back of expectations of an incoming raise in interest rates by the Bank of England. Whilst the GBP/AUD is above 2.0150 (the trend line), the pound’s strengthening must be considered. If the speed of the pound’s growth is maintained, one can consider 2.1106 as a target.
Last week the GBP/AUD finally reached the 2.0488 target (from 18th May idea). The GBP/AUD strengthened sharply on 17th June. An upward impulse was gifted to the pound from UK labour market data and the minutes from the Bank of England.
The Bank of England’s minutes showed that the members of the monetary policy committee voted for the policy to be left as it was. The minutes state that growth inhibiting factors have started to wane. Any increase in interest rates will be gradual.
On the cross I’ve had a look at different scenarios and have come to the conclusion that, whilst the GBP/AUD is above 2.0150 (the trend line), we must consider that the pound will strengthen. I’ve put a parallel line at the 2.0046 peak (the dotted line. If the speed of the pound’s growth is maintained, one can consider 2.1106 as a target.
If 2.0150 will be broken, then a deep recoil will follow. The pound loves to roll back by 61.8%. Since September 2014, the GBP/AUD has recoiled 3 times by 61.8%. If we take the fibo level from the wave of 1.8979 to 2.0547, the 61.8% level goes straight through 1.9571.
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