The Pound Sterling weakened on Thursday after reports showed the UK economy grew less than expected in November, while factory activity continued to decline. The UK’s GDP grew by 0.1% after shrinking in October, falling short of the 0.2% growth economists had predicted. Additionally, manufacturing and industrial production dropped in November, signaling ongoing challenges for UK factories as demand remains weak.
Traders increasingly bet that the Bank of England (BoE) may cut interest rates at its February meeting, especially after recent inflation data showed slowing price growth. Lower inflation has also eased pressure on UK government bond yields, which had been rising due to economic concerns, but the Pound remains under selling pressure amid economic uncertainty.
GBPAUD – D1 Timeframe
The probability of price reacting from an Order Block increases significantly when such an OB occurs immediately after an FVG (Fair Value Gap). Regarding the price action on the daily timeframe chart of GBPAUD, we can see the highlighted demand zone, acknowledging that it occurs right after an FVG area. In addition, the highlighted OB enjoys further confluence from the Fibonacci retracement level and the 200-day moving average.
GBPAUD – H4 Timeframe
The 4-hour timeframe chart shows that GBPAUD prices are currently contracting within the boundaries of a descending wedge whilst approaching a key area of demand. Considering this aligns with all the aforementioned confluences, it is easy to conclude with a bullish bounce from the highlighted region.
Analyst’s Expectations:
- Direction: Bullish
- Target: 1.99879
- Invalidation: 1.94573
