GBP/AUD Rises to a 16-month High, Trades Above 1.9100

2 min read
19 Aug, 21
Written by Clover4X
Article Highlights:
  • GBP/AUD pushes above a 16-month high as sterling advances for a fourth straight day
  • Currency traders scramble after Fed released its meeting minutes Wednesday afternoon

GBP/AUD Rises to a 16-month High

The GBP/AUD exchange rate continued to rise early Thursday, surging to a 16-month high after data showed UK inflation eased in July, while Australia’s economy is pressured by reimposed Covid-19 restrictions.

The British sterling advanced against the Australian dollar this morning, setting a session high of 1.9118, a level last seen on May 12 last year when the pair traded at a high of 1.9128. Today’s uptick in the value of the pair is a continuation of the last three days of gains as the GBP/AUD is on pace to log its fourth straight day of winnings.

Traders and investors who buy into the pair could be challenged to take it above the current level if bears decide to pile and form a long-term double top. Bulls, however, have on their side the strong buying momentum that has placed the pair well above the 200-day moving average.

Since January, the GBP/AUD rate has barely had any resistance that would prevent the value of the sterling from moving higher. That has allowed the UK currency to appreciate against its Australian counterpart by 7.70% year-to-date.

Traders Scramble Following Fed Meeting

Elsewhere in the currency market, the US dollar is trading mixed against a basket of currencies after the Federal Reserve announced it may start its tapering process this year. The release of the minutes from the last Fed meeting caused traders to scramble as they digested the US central bank’s update on its approach to the US economy.

The EUR/USD reacted strongly to the upside at the time of the release. The greenback slid across the board on the news that Fed policymakers could begin dialing back the bank’s $120bn in monthly bond purchases that have supported the US economy since the pandemic arrived in March 2020.

The dollar reversed before the end of Wednesday’s session and the EUR/USD finished the day virtually flat after rising more than 30 pips. Today, the EUR/USD pair is trading to the downside at a 10-month low near 1.1680.

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