Trading opportunities for currency pair: the pound has rebounded upwards from the fibo zone, 61.8-76.4%. Taking expectations for RBA and Bank of England rates into account, await a rise in the pair to the middle of the canal or 61.8% from a drop from 2.0026 to 1.8826.
In the week just gone, the Australian dollar closed down against many currencies, including the British pound. In my review on the AUD/NZD pair from 23rd March, I said that Glenn Stevens, the Chair of the RBA, in his last speech announced that the fall of the Australian dollar is not yet finished. The central bank was discussing another reduction of interest rates, but on 3rd March they sat on the fence and kept them at 2.25%.
During this time the situation with the pound has changed. After the Bank of England’s Mark Carney and his colleague Ben Broadbent made a speech, the pound/dollar recovered up to 118 points, all the way to 1.4913. On the back of this, the pound strengthened against the Australian dollar.
At a conference with the Bundesbank, Mark Carney announced that the regulator’s next step would most likely be to raise rates, not to drop them. His deputy, Broadbent, also supported this view and added that the deflationary process won’t last long and so won’t cause significant damage to the economy.
So let’s have a look at the graph: a daily graph is below. Since 8th September, 2014 the GBP/AUD has had a bullish trend. It’s interesting that the pound has jumped up 3 times from the 61.8% zone: I’ve marked out the zones on the graph.
If Carney continues to support the pound by increasing rates, then there’s a high probability that it’ll reach a 2.0026 maximum. I’ve not started considering that the pound will strengthen to that level, but to 61.8% (1.9561) is a realistic proposition. According to the CCI and AC indicators, a bull divergence is has been formed.
On Friday the GBP/AUD closed up at 1.9190. The pound had another growth from the 61.8-76.4% fibo zone. On Monday many currencies move against Friday, so if you’re buying pounds, wait till it hits the 1.9070 zone.
Why not take advantage of the improved version of the Trader’s Calculator.