It was big moves today for the GBPUSD as it lifted on the back of the Bank of England announcement that it would hold interest rates at 0.50%. This went against the market consensus which believed that the BoE would indeed cut rates to 0.25% in an effort to come out strong in helping prop up the economy after the recent Brexit vote. I believe though that the BoE made the right choice at the end of the day as a knee-jerk reaction without any data can be reckless and in this case holding the rates for the time being enables the BoE to have more in its arsenal further down the line when it comes to monetary policy. The trick now will to see how the market reacts to a pro-Brexit government that is pushing to exit the EU by December 2018, this will be turbulent but the BoE stance signals that they believe they can weather the storm at present.
GBPUSD traders have jumped on the chance to ride the market higher on the basis that the market was priced in the wrong way, with the cable jumping 200 pips in its day session. There were a number of major factors and we saw the cable punch through resistance at 1.3340, for now though it looks unlikely to maintain the climb as it has failed to close above it at this stage, and it looks like 1.3340 may be the level to beat before the market considers further higher highs. Support at 1.2795 is still considered the long term goal for the bears in the market as they look to push lower, and in the long run they certainly may get their chance.
The Australian dollar has been an interesting after the recent employment figures disappointed the market coming in lower at 7.9K (exp 10K) this was well off the previous figures which came in at 17.9K. The unemployment rate however managed to stave off any further rises remaining flat at 5.8%, this will be a positive for the Reserve Bank of Australia which has so far been worried over the labour market given the recent global uncertainty that has been sweeping the markets. For now though there is certainly risk appetite back in the markets while the market takes a break from the stress caused across the other side of the world in European markets.
The AUDUSD has been climbing hard and the trend is certainly your friend in this case, with the bears looking all the more weaker despite the uncertainty. The battle is on to break through the current resistance area around 0.764 and rise higher to the next level at 0.7679. Certainly I would expect that this level will be the make or break as we have seen serious weakness at this level, and it could be the chance for the bears to take control if we see a push through 0.7650.