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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

AUD/USD slumps and EUR/USD edges lower, while GBP/USD looks towards the next UK rate hike

The Aussie dollar is losing ground in the wake of a fresh RBA rate hike, while the euro and sterling are both giving back some gains against the US dollar.

EUR/USD edges back towards $1.22

The rebound continues here, with EUR/USD taking advantage of the US dollar’s short-term bout of weakness, and bolstered by the European Central Bank's (ECB) decision to hike interest rates in July.

Further upside continues to target the $1.035 area that marked the lows in May and June, and denotes potential resistance as the pair rebounds for the time being. Above this level, we would watch the 50-day simple moving average (SMA), currently $1.041, with trendline resistance from the late May-high potentially in play around $.1036.

Price action has yet to denote a reversal, but a drop below the $1.0146 low from last Friday would provide a possible start to a move lower, which would then put parity and $0.9953 into view.

GBP/USD still climbing ahead of BoE meeting

Given that the Bank of England (BoE) is expected to deliver a 50 basis point (bps) rate hike this week, the strength of is not surprising, with GBP/USD. Only once the statement and press conference are done will we have a better sense of whether the macro outlook supports further gains for the pair.

Having recovered the 50-day SMA, the price now targets $1.2366, the mid-June high, and then on towards the late May-highs around $1.2635. If it can exceed this lower high then evidence of a reversal in trend would begin to build.

As with EUR/USD, the price has yet to begin a reversal, though a drop back below $1.209 would suggest that a fresh decline could be underway, heading in the first instance towards the July-low at $1.176.

AUD/USD slumps despite RBA rate hike

The Reserve Bank of Australia (RBA) move to tighten policy by 50 bps has pushed interest rates to their highest level in six years. But this has done little for AUD/USD, which has begun to move lower in a textbook example of ‘buy the rumour, sell the fact’.

This comes in the wake of a rally for the pair since the July-low. The price briefly moved above $0.70 yesterday, but the reversal here could now be in play. If this marks a reassertion of the downward move, the lows from July down at $0.6747 come into play once again.

A revived bullish view requires a move back above $0.70, to then target the 16 June-high at $0.7069.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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