GBPAUD is currently testing an area of interest visible on its 1-hour time frame, still deciding whether to head north or south. Price is finding support at the 50% Fibonacci retracement level, which lines up with a broken resistance and the 2.0500 to 2.0600 major psychological support levels.
In addition, price is also drawing support from the 200 SMA, which has held as a dynamic inflection point in the past. The 100 SMA is above the 200 SMA so the ongoing uptrend could resume.
At the same time, stochastic is nearing the oversold area, which means that buyers might take control of price action soon. In addition, RSI is also starting to climb out of the oversold region and indicate a return in buying pressure. A rally could take GBPAUD back up to the previous highs at 2.0900 while a break below the 2.0500 mark could be a sign that a reversal is about to take place.
GBPAUD Fundamental Factors
Event risks for this trade today include the BOE interest rate statement, although no actual changes to interest rates or asset purchases are likely to be made. Traders could take their cues from potential remarks regarding the Greek debt situation and its impact on the UK economy. Cautious remarks could lead to pound weakness while reassuring words could allow the pair to regain ground.
Earlier today, Australia printed a stronger than expected jobs report, as the economy added 7.3K jobs in June versus the consensus of a 2.1K decline. However, the previous month’s reading was downgraded from 42K to 40K.
The selloff in the Chinese equity market paused in today’s Asian trading session, suggesting that the government’s efforts might be providing much-needed support. Trading in some exchanges on the mainland has been halted while a government-owned agency provided 260 billion CNY to fund management firms in order to encourage them to buy stocks.
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