GBPAUD had been trading above a long-term ascending trend line, but it seems that a reversal is brewing. The pair recently broke below the rising support area and is pulling back up for a quick correction before resuming the potential downtrend.
For now, the 100 SMA is above the long-term 200 SMA, signaling that the current uptrend could carry on. RSI is on the move up, suggesting further gains for the pair, while stochastic is nearing the overbought region to indicate that bearish momentum might pick up.
A selloff could take the pair down to the recent lows at 2.1000 or even lower. However, an increase in buying momentum could mean a move up to the previous highs past 2.1400. This depends on whether or not the area of interest around the 2.1300 level keeps gains in check.
GBPAUD Fundamental Factors
The UK events lined up today could determine where this pair might be headed in the longer-run, as the BOE will announce its rate statement and release the minutes of its latest meeting. At the same time, the Inflation Report hearings will take place and Carney will have his testimony later on.
Central bank events have been mostly upbeat in the UK, as the policymakers shared that they’re moving closer to to tightening. More upbeat remarks in today’s events could mean more gains for the pound, as this would make the BOE one of the more hawkish major central banks like the Fed.
On the other hand, downbeat remarks could allow the Aussie to keep advancing against the pound, as the latest jobs report from Australia came in better than expected. The economy added 38.5K jobs in July versus the projected 10.2K gain, allowing the Aussie to regain ground after the previous day’s upbeat retail sales, trade balance, and RBA statement.
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