FX Levels to watch – GBP/USD, EUR/USD, AUD/USD

BoE day has arrived, with the potential for significant volatility in sterling crosses. In addition, some of this may spill over to euro pairs depending on the actions taken by Mark Carney and his team.

Sterling and US dollar currencies
Source: Bloomberg

GBP/USD caught in a bearish trend

July’s tale has been replicated in August, namely that $1.34 continues to be too much of a barrier for upside progress here. The pair remains stuck in a bearish trend, with little sign that a real upward move is on the cards – today’s Bank of England meeting has certainly stayed the hand of sterling bulls, with the ongoing tide of negative data not helping matters.

A significant dovish shift on the MPC today might see the pair head down towards $1.32, and then on to possible support around $1.3050. 

EUR/USD weakness looks to bring out the buyers

The pair has yet to regain the heights seen earlier in the year at $1.15, and yesterday’s sharp reversal suggests a period of USD strength may be in the offing. As a result we could see a move back to the 200-day simple moving average ($1.1078), and then perhaps down to the late-July low around $1.0950.

Nevertheless, buying the dips has been the approach to take here since February, with sustained weakness likely to bring out fresh buyers. 

AUD/USD gains stall

AUD/USD gains have stalled since late June around $0.76, with the past few days repeating that pattern. Nonetheless, for now the uptrend goes on, so weakness back in the direction of $0.74 could see fresh buyers emerge.

There is a clear amount of resistance from $0.76 to $0.77, with a break above the latter potentially heading towards the mid-April highs at $0.7850. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.