Analysis of the GBP/AUD Pair
The British Pound Stabilizes Following a Report That Iran May Reopen the Strait of Hormuz
The British pound traded steadily on Tuesday near its four-month low against the Australian dollar as traders assessed a report that Iran had offered to reopen the Strait of Hormuz within 7 days.
The disruption of this vital shipping route has put pressure on global oil supplies and posed a major challenge to import-dependent countries, such as the United Kingdom.
The central bank kept interest rates unchanged at its last meeting, though traders still expect at least one hike this year.
After the British pound rose on the back of an orderly political transition to Prime Minister Andy Burnham’s government, it weakened again amid concerns that investors are anticipating an excessive number of interest rate hikes by the Bank of England.
The Bank of England is an exception among major central banks as it continues to hold interest rates steady despite accelerating inflation a divergence that exposes the pound to the risk of having to catch up and raise rates later to make up for the delay.
On the other hand, in Australia, forecasts indicate that the Reserve Bank of Australia will raise interest rates next week, and Governor Michelle Bullock did nothing to dissuade them from this belief during her latest public appearance this morning ahead of the meeting scheduled for September 28 and 29 next week.
GBP/AUD on a technical level
The AUD/GBP pair rebounded from support levels near 1.8730, which is a good area to push the pair higher once again.
This is especially true given the positive divergence on the MACD indicator for the 4-hour timeframe.
We expect the Australian dollar to rise, targeting 1.8850 as an initial target, followed by 1.8990 as a secondary target.
This scenario would fail if the pair breaks below the 1.9720/30 support levels with a 4-hour candle closing at least below them.
