EUR/GBP stable but GBP/USD and AUD/USD slip to multi-month lows on rising US yields and dollar
Outlook on EUR/GBP, GBP/USD and AUD/USD as ‘rates higher for longer’ is expected to last well into 2024.
EUR/GBP remains bid while above £0.8631
EUR/GBP's fall from its £0.8706 September peak made last week took it to Thursday’s £0.8631 low from where it is recovering as Germany is shut for reunification day and the British pounds weakens during the UK Conservative party conference which is accompanied by rail and tube strikes.
A rise above Friday’s high at £0.868 could lead to the September peak and the 200-day simple moving average (SMA) at £0.8706 to £0.8719 being revisited.
Support below Monday’s low at £0.8654 is seen along the September-to-October uptrend line at £0.8638 and also at last week’s low at £0.8631.
GBP/USD drops to new six-month low
GBP/USD has resumed its descent and swiftly fell to a new six-month low at $1.2093 as the US dollar continues to appreciate amid rising US yields, solid manufacturing purchasing managers index (PMI) and as investors believe that the ‘rates higher for longer’ period will last well into 2024 following mixed hawkish and dovish Federal Reserve (Fed) committee member comments.
The mid-March low at $1.2011 and the minor psychological $1.20 mark are thus next in sight.
Minor resistance sits at last week’s low at $1.2111. The September downtrend channel resistance line at $1.224 together with Friday’s high at $1.2271 represent key resistance. While below it, the steep downtrend remains in place.
AUD/USD falls to eleven-month low
The appreciating US dollar and the fact that the new Reserve Bank of Australia (RBA) governor Michele Bullock during her first meeting kept the central bank’s cash rate unchanged at 4.1% led to AUD/USD dropping to an eleven-month low at $0.6306.
The next lower potential downside targets are the $0.6273 November 2022 low and the $0.6171 October 2022 trough.
Strong resistance above last week’s low at $0.6332 can be found between the mid-August low at $0.6365 and the 21 September low at $0.6385. While the cross remains below its $0.6511 to $0.6522 late-August and September highs, the medium-term downtrend will remain intact.
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