What’s Driving The GBPAUD?

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.


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.