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Aug 28, 2024

Currencies

Pound Falls as Market Awaits Key Data

The British pound dropped on Wednesday, moving away from recent 29-month highs against the US dollar, as investors took profits. The currency had previously gained strength after Bank of England (BoE) Governor Andrew Bailey made bullish remarks at the Jackson Hole event, which reduced the likelihood of an interest rate cut in the UK this September. In contrast, US Federal Reserve Chair Jerome Powell hinted at a possible rate cut in September, creating a different outlook for US interest rates. As a result, the gap between UK and US interest rates may narrow, potentially supporting the pound against the dollar. However, uncertainty remains as markets closely watch upcoming decisions from both central banks.

GBPAUD – H2 Timeframe

GBPAUDH2_(2).png

GBPAUD recently broke above the high around the 1.94771 price mark; making a corrective move shortly after. The current price action is an extension of the corrective move, which I expect would bring price into the 76% region of the Fibonacci. The demand zone aligns well within the target area of the Fibonacci, and provides additional confluence to the trendline support and pivot zone.

Analyst’s Expectations: 

Direction: Bullish

Target: 1.96020

Invalidation: 1.92690

GBPCAD – H4 Timeframe

GBPCADH4_(4).png

The 4-hour timeframe chart of GBPCAD presents a simple market structure template. We see the previous break of structure to the left, followed by a retracement move that is now approaching the area of interest. The area of interest features a drop-base-rally demand zone, a trendline support, and a 100-period moving average support. All of these factors lead me to reason in favor of a bullish sentiment.

Analyst’s Expectations: 

Direction: Bullish

Target: 1.78550

Invalidation: 1.76872

CONCLUSION

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Trading foreign currencies on margin involves significant risks and may not be suitable for everyone, as high leverage can increase both potential gains and losses. Before entering the foreign exchange market, it is essential to evaluate your investment goals, personal experience, and risk tolerance.

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Adetola-Freeman Ogunkunle

Author: Adetola-Freeman Ogunkunle

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