GBP/AUD is consolidating inside a descending triangle pattern, showing forex signals for a range play for short-term traders or a possible breakout and longer-term bias for swing traders.
Price is just testing the top of the triangle with stochastic moving down from the overbought zone. This suggests that price could move back to the bottom of the triangle near the 1.8050 minor psychological level for another potential bounce. A breakout in either direction could last by as much as 200 pips, which is the same height as the chart pattern.
Watch out for significant breaks past the 1.8100 mark for a possible long-term rally forex signals or a break below the 1.8050 area for a potential selloff.
Forex Signals and Forecasts
UK PMI figures are up for release this week, with small declines expected in the manufacturing, services, and construction sectors. However, stronger than expected data could lead to more pound gains as this might support the BOE’s plans to start tightening monetary policy this year. Recall that BOE Governor Carney hinted that they could hike rates sooner rather than later while the BOE meeting minutes showed that policymakers were surprised that markets didn’t attach a strong possibility to a BOE rate hike for this year.
As for Australia, the prospect of government spending cuts might weigh on overall economic growth, as indicated in the latest RBA decision. The upcoming rate statement could remind traders of this scenario, as well as the Australian dollar’s historically high value. In that case, GBP/AUD could break to the upside. Other Australian data due this week include retail sales and trade balance.
Bear in mind though that China has recently shown signs of a rebound in its manufacturing sector and this might be enough to keep the Australian dollar afloat against its counterparts. If the UK data shows weakness while the RBA chooses to highlight the pickup in China, this pair could make an upside break.
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