FxWirePro: GBP/AUD trends higher, but faces potential pitfalls

• GBP/AUD edged higher on Monday as traders increased bets on tighter monetary policy from the Bank of England.

• BoE Governor Andrew Bailey said on Friday that persistently high energy prices could make it harder for the central bank to keep interest rates on hold..

• BoE Deputy Governor Dave Ramsden said on Monday that continued inflationary pressures could strengthen the case for further interest rate increases..

• BoE Deputy Governor Dave Ramsden said on Monday that rising inflation pressures could bolster the case for further rate hikes..

• Ramsden was among the six members of the BoE’s Monetary Policy Committee who voted to keep interest rates unchanged this month, while three members backed a rate hike.

• Money markets are pricing in an 85% probability of a 25-basis-point rate hike in November, which would lift the policy rate to 4%, with four further hikes expected by mid-next year.

• Immediate resistance is located at 1.8925(50%fib), any close above will push the pair towards 1.8945(Higher BB).
 

• Immediate support is seen at 1.8822(SMA 20) and break below could take the pair towards 1.8749(38.2%fib).

Recommendation: Good to sell around 1.8900, with stop loss of 1.8950 and target price of 1.8820