• GBP/AUD traded in tight range on Monday as investors awaited Bank of England’s upcoming policy announcement later this week.
• The Bank of England is widely expected to cut its key interest rate to 4.00% from 4.25% at Thursday’s policy meeting, with markets also anticipating at least one more cut before year-end—despite consumer price inflation climbing to nearly double the BoE’s 2% target in June.
• For currency markets, particularly GBP crosses, the tone of the BoE’s forward guidance will be critical
• Traders will be watching not just the rate cut itself, but any indication of how far and how fast the Bank may ease further, and whether it may also consider adjusting the pace of quantitative tightening in the months ahead.
• Immediate resistance is located at 2.0576(SMA 20), any close above will push the pair towards 2.0723(50% fib).
• Strong support is seen at 2.0402(61.8% fib) and break below could take the pair towards 2.0377(Lower BB).
Recommendation: Good to buy around 2.0510, with stop loss of 2.0400 and target price of 2.0580
