FxWirePro: GBP/AUD drifts lower, could be on verge of bigger drop

• GBP/AUD edged lower  on Thursday after Bank of England held rates unchanged  and warned of inflation threat from Iran war

• The Bank of England held interest rates steady on Thursday and outlined several possible economic scenarios linked to the Iran war, warning that the most severe outcome could require “forceful” rate hikes, while milder scenarios might not require any increase at all..

• Amid deep uncertainty over the conflict’s duration and economic impact, the Bank of England Monetary Policy Committee voted 8–1 to keep the Bank Rate at 3.75%, with Chief Economist Huw Pill the only member favoring a hike to 4%.

• The decision was in line with expectations in   of economists but investors responded by scaling back their bets on BoE rate hikes this year.

• After Thursday’s decision, markets priced in around 0.61 percentage points of additional rate hikes from the Bank of England this year, down from roughly 0.76 percentage points before the announcement.

• Immediate resistance is located at 1.8937 (SMA 20), any close above will push the pair towards 1.9016(38.2%fib).

• Strong support is seen at 1.8772 (Lower BB), and break below could take the pair towards 1.8711(23.6%fib).

Recommendation: Good to sell  on  around 1.8950 with stop loss of 1.9120 and target price of 1.8850