The next 24 hours is going to be interesting for GBPAUD traders. The Reserve Bank of Australia is scheduled to announce monetary policy decisions tomorrow at 5:30 am BST. The Bank is expected to deliver a 25 basis point rate hike, putting the main interest rate at 0.60%. However, some say that the Bank may go beyond this and deliver a 40 basis point rate hike. This would put the main rate at 0.75% – its pre-pandemic level. As such, there is a scope for surprise and a pick-up in AUD volatility. However, GBP may get a chance to move even sooner, namely today in the evening. It was reported that a required threshold to trigger a confidence vote in Boris Johnson as leader of the Conservative Party was met and vote will take place this evening between 6:00 and 8:00 pm BST. If Johnson is ousted as a Conservative leader, it would also mean losing a Prime Minister job. On the other hand, should the confidence vote fail, Johnson would be spared from another one for at least a year.
Taking a look at GBPAUD chart at D1 interval, we can see that the pair has once again dipped below the 1.7400 support last week. However, an attempt of breaking back above this price zone can be spotted today. If bulls succeed with breaking above, an upward move towards the upper limit of the recent trading range in the 1.78 area may be on the cards. Impact of today’s confidence vote on Boris Johnson is uncertain but even if he is ousted it should not have much of an impact on UK’s policy as Conservatives will still remain in power. When it comes to the RBA decision, scope for a hawkish surprise is bigger than for a dovish one. In case RBA provides fuel for AUD with a bigger-than-expected rate hike, GBPAUD may experience some weakness and a break above the aforementioned 1.74 area may be at risk.