GBPAUD has been trading below a descending forex trend line in the past weeks and may be due for a pullback to the Fibonacci levels marked on the chart above. Price has recently dipped to a low of 1.9350 and might retrace as high as the 1.9700 resistance level, which lines up with the 61.8% Fibonacci retracement level and forex trend line.
Stochastic is moving up but is almost in the overbought area, which means that a decline is possible sooner or later. Once the oscillator crosses down from the overbought region, pound bears could take control of price action and push GBPAUD back to its previous lows.
Forex Trend Forecast
Over the weekend, China printed a stronger than expected trade surplus, implying that demand for Australia’s commodity exports might pick up. This could lend more support for the Australian dollar early on, but this depends on how upcoming data this week turns out.
The main event risk for this forex trend setup might be the Australian jobs release, which might indicate another downturn in hiring for February. If so, GBPAUD could bounce higher and possibly reach the trend line resistance before heading further south. If job losses are seen, price might even break past the forex trend line and move higher.
Last week, the UK printed a weaker than expected services PMI report, which means that the industry might contribute a lower amount to overall economic growth. This sector accounts for majority of the country’s GDP, which suggests the possibility of seeing a weaker expansion for the quarter.
Also last week, the RBA decided to keep monetary policy unchanged, although most analysts predict that the Australian central bank might cut interest rates again. This could hinge mostly on the upcoming jobs report, as Governor Stevens has mentioned that the slump in hiring has been one of their main concerns.
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