What’s Driving The GBPAUD?

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What's Driving The GBPAUD?

What's Driving The GBPAUD?

The UK Sterling has declined versus the Australian dollar on Friday, having experienced something of a volatile latter half of the week. Will the bears stay in control of the GBPAUD heading into the weekend, and if so, what are the levels to watch?

Let’s take a look at the intraday chart. The first thing to notice is the extreme volatility over the last couple of days. The GBPAUD collapsed from intraday highs on Thursday, after a raft of mixed data came out of Australia, and its closely linked China, late on Wednesday.

Australian employment change data revealed 18.1K new jobs were created during March versus a forecast of 5.0K. Additionally, the Australian Bureau of Statistics reported an unemployment rate at 5.8%, beating consensus expectations at 6.0%. Conversely, however, disappointing data out of China muted any potential short-term response. The Asian giant reported YoY exports at -6.6% versus a forecast of 4.0%, and YoY imports at -11.3% versus a forecast of -11.3%. The pair fell to weekly lows at 1.7733, and corrected towards previous resistance to close out the day at 1.7835.

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Thursday evening brought more disappointing Chinese data to the fore, with CPI YoY reported at 2.4%, missing a forecast of 2.5%, and PPI YoY reported at -2.3% versus a forecast of -2.2%.

As a result, the GBPAUD gave back yet more of its gains during Friday morning, to intraday highs at 1.7899. A small correction towards the 200-period SMA ensued, and the pair formed something of a short-term double top. The double top completed with a neckline break at 1.7868, and price fell to intraday lows at 0.7773. This offers up a bearish technical bias heading into the weekend. Look for a failed retest of resistance at 1.7835 to validate a downside target of aforementioned lows at 1.7773, with a close below this level offering up 1.7740 as a secondary downside target.

To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.