After trading in positive territory for most of the session, the AUD to GBP rate is trading higher after incoming Bank of England policy maker Swati Dhingra said he favoured a gradual approach to rate hikes. This dovish statement appears to have spooked the GBP bulls and led to a pullback on the Pound in the current hour of London trading.
Dr Swati Dhingra is an Associate Professor of Economics at the London School of Economics. The latter is facing the Treasury Committee in the UK Parliament as part of the confirmation proceedings for her appointment to the Governing Board of the Bank of England. Her comments came before the hearing before her possible appointment in August.
The Aussie Dollar had seen intraday weakness from risk-off events in China. But the AUD to GBP rate got a breather when the Bank of England Governor Andrew Bailey said that the apex bank has other options beyond what it has readied to tackle inflation. Bailey said there would be circumstances to prompt more forceful action, but the bank was “not there yet in terms of the next meeting”. These comments confirm market suspicions of the BoE’s reluctance to be as forceful as its peers in hiking rates.
As a result, the AUD to GBP rate has recovered from its earlier losses and is now up 0.13%.
AUD to GBP Rate Forecast
The intraday drop is now testing support at 1.76194. This is also where the wedge’s lower border intersects the horizontal price mark. A breakdown of this support level invalidates the wedge, targeting 1.74664 initially. Below this area, 1.73928 (8 June low) and 1.72957 (3 June low and rectangle’s lower edge) become viable targets if there is further price deterioration.
On the flip side, a bounce on the support at 1,76194 preserves the integrity of the wedge pattern. A bounce from here that can make it to 1.78134 (29 April and 24 June highs) completes the wedge. However, a further push to the wedge breakout’s completion point at 1.79287 (11 March 2022) requires a break of the rectangle’s upper border. An additional upside target is seen at the 1.80361 price mark (17 March 2022 high) if the advance continues.