GBP/AUD has been in a long-term downtrend, especially for the past few forex trading months. The pair has fallen to the 1.7800 major psychological support before rebounding for a market correction.
Based on forex trading price action on the 4-hour time frame, it appears that the pullback is already over and that GBP/AUD is ready to resume its selloff. As you can see, the 50% Fibonacci retracement level held as resistance before the pair turned lower from the 1.8300 major psychological level.
GBP/AUD Forex Trading Outlook
The fundamental bias for this pair is also to the downside, as the Reserve Bank of Australia has already expressed its decision to maintain a neutral monetary policy stance and refrain from cutting interest rates in the near term. The Bank of England, although also optimistic about the UK economic recovery, is a little more cautious compared to the RBA.
Earlier this week, the Australian economy reported a stronger than expected increase in employment, enough to keep their jobless rate steady at 5.8%. Meanwhile, data from the UK has also been strong but some sectors like construction are showing weak spots.
BOE Governor Carney has hinted that the central bank might be ready to hike interest rates before the UK general elections takes place this year. Traders are awaiting more clues in today’s BOE interest rate statement, but it looks like details will have to wait until the minutes of the meeting are released.
Further forex trading losses for GBP/AUD can push the pair back down to the 1.7800 major psychological support level or lower. On the other hand, a rebound might still take place and take the pair as high as the 1.8300 handle.
Take note though that since the summer months are starting, liquidity might thin out in the markets. This could mean less trending behavior and more range-bound forex trading market movement, which could keep GBP/AUD moving sideways above the 1.8000 support zone.
To contact the reporter of the story: Marco Roemer at firstname.lastname@example.org