In case you missed it, annualized consumer price increases in the U.K. slowed down from 8.7% to a 15-month low of 7.9% in June. The core rate, which excludes volatile items such as energy and food, also eased from 7.1% to 6.9%.
Both inflation rates are still waaay above the BOE‘s 2.0% target, but the progress is welcome to those who are worrying about the U.K.’s cost of living crisis.
Decreased pressure on the BOE to extend its interest rate hikes weighed on GBP across the board.
GBP/AUD, in particular, dropped from the 1.9180 area and reached the 1.9060 levels before some buyers stepped in.
Have we seen the last of GBP weakness today?
Australia will print its June labor market data in the next Asian session. Word around is that the country has seen fewer job additions, which would reinforce the RBA’s decision to pause its rate hikes.
If traders are more happy about the U.K. making progress in its cost of living crisis, or if Australia’s jobs data drag AUD lower, then GBP/AUD could regain strength.
The pair could bounce from its trend line support that’s conveniently not far from the S2 (1.9040) of today’s Pivot Points.
Of course, we’re still not sure how U.S. session traders will react to the U.K.’s news, or if it will matter after the U.S. also prints lower-tier data like housing starts later today.
So, I’ll be looking to enter long trades between the S1 (1.9090) and S2 Pivot Point levels while aiming for previous areas of interest like 1.9180 or 1.9230.
I’m thinking of placing my stops just under the 1.9000 psychological handle and considering adding additional long positions if there’s enough bullish momentum after a trend line bounce.
What do you think? Will GBP/AUD extend its short-term uptrend?
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