FxWirePro: Pound slumps on surprise UK inflation dip, good to short rallies in GBP/AUD

• GBP/AUD slumps below 200-DMA support at 1.6660 to hit 3-month lows at 1.6401.
   
• UK consumer prices rose at an annualized 2.6% during last month vs. a forecasted gain of 2.9% and down from May’s 2.9% raise.
   
• CPI was flat on a monthly basis (vs. 0.2% estimated and 0.3% previous) while Core prices also rose below expectations 2.4% over the last twelve months.
   
• The Bank of England has taken a noticeably hawkish line recently, but today’s inflation data miss casts doubt over a rate hike later this year.
   
• On the other side, the RBA's hawkish tone in its July monetary policy meeting minutes buoyed the Aussie.
   
• GBP/AUD trades with a heavily bearish bias, scope for test of 1.6020 level (major trendline support).
   
• Bearish invalidation on retrace above 200-DMA.
   

Support levels - 1.62 (Feb 7 low), 1.6180 (Mar 29 low), 1.6020 (trendline), 1.60 (Jan 16 low)

Resistance levels - 1.6660 (200-DMA), 1.6676 (5-DMA), 1.6840 (20-DMA)

Call update: Our previous call (http://www.econotimes.com/FxWirePro-GBP-AUD-on-track-to-test-200-DMA-at-16660-good-to-short-rallies-799002) has hit all targets.

Recommendation: Good to go short on rallies around 1.6480/ 1.65, SL: 1.6660, TP: 1.62/ 1.61/ 1.6020

FxWirePro Currency Strength Index: FxWirePro's Hourly GBP Spot Index was at -50.3908 (Neutral), while Hourly AUD Spot Index was at 155.081 (Bullish) at 1030 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.

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