GBP/AUD has recently been consolidating inside a descending triangle forex setup then made an upside break, indicating that further gains are in the cards for the pair. Take note that the chart pattern is around 200 pips in height, which means that the resulting rally could last by the same amount.
Price appears to have found resistance at the 1.8100 area though, as the RBA interest rate decision turned out to be bullish for the Australian dollar. This might lead to a quick pullback to the broken triangle resistance before the climb resumes.
Forex Setup Scenario
Bear in mind that, even though the RBA sounded optimistic with its latest economic forecasts, the UK is still closer to tightening monetary policy. BOC Governor Carney has emphasized that the central bank might hike rates sooner rather than later since the housing market might need to be cooled down. This was echoed by the BOE meeting minutes last month.
UK PMI figures are due this week from the manufacturing, construction, and services sectors. Small declines are expected but stronger than estimated data might still lead to strong pound rallies.
As for Australia, retail sales and trade balance are still on the docket. Given the recent slump in hiring and the surge in commodity prices, both reports might be in for weaker than expected results. In that case, GBP/AUD might resume its buy forex setup scenario sooner or later. Gains could take the pair up to the 1.8300 major psychological resistance.
If the breakout proves to be a fakeout though, GBP/AUD might sink by 200 pips as well. This could take the pair down to the 1.7850 minor psychological support area.
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