Daily Trade Recommendation

Originally updated: 07:00

Trading Bias: LONG

Currency pair: GBP/AUD

Current Sentiment: Bullish

In today’s trading session we will be focussing on buying opportunities on the GBP/AUD.

Fundamentals:

Overnight we had soft Australian capital expenditure data which has brought further RBA rates cuts back into the forefront of the markets mind, despite the RBA disappointing the market recently (not mirroring the rhetoric coming from other central banks that have recently adjusted monetary policy) by failing to state that further cuts could be on the horizon if data fails to improve. The RBA’s focus remains on spurring inflation, growth and injecting some momentum into their lagging housing market – every negative data point coming from Australia is going to start putting pressure back on the RBA to do something to improve those data points coming in.

Later in today’s session we have UK Second estimate GDP “Measures – Change in the inflation adjusted value of all goods and services produced by the economy”, figures are expected at 0.5% vs previous 0.5%. If figures come out as expected the GBP will rally from where it is, if however figures come out weaker the pair will dip, but bearing in mind the BoE’s rhetoric that they fully expect these data points to weaken and are unconcerned as they remain focussed on labour market data when gauging an appropriate time to hike rates, where by all labour market data coming from the UK has been very positive.

Technicals:

We expect this pair to rally off during today’s session.

There is strong support at 1.9650 – 1.9700 which could provide trading opportunities should the price pull back. Look for the price to bounce off this level if it retraces back to it.

Remember to be aware of intra-day news as this can very often change the sentiment which makes our trade weaker. Look for any news that could be negative for this pair, which would change the sentiment to bearish.

Other Market Moving News:

Looking ahead at today’s economic calendar sees the release of the German jobs report, US CPI & Core CPI, Canadian Core CPI, US Durable Goods and unemployment claims.

Of heightened importance we also have Japanese national core CPI y/y with the BoJ struggling to hit their 2% target (disregard recent reading as it doesn’t take into account sales tax hike) and comments from Kuroda overnight that there is no limit to how much they would be prepared to expand their balance sheet, expect any weak data points to cause investors to speculate over the potential for further easing.