It’s an important time for GBPAUD, both from a technical perspective and a fundamental one. The pair is currently testing an important trend line and horizontal resistance zone around 1.9500; a break could reinvigorate bulls into testing the pair’s recent highs. Meanwhile, the pair’s long-term upward trend line is looming on the downside; a break of which would open a bearish head-and-shoulders pattern. This could see price through 0.9000 and even beyond its 200-day SMA.
On the fundamental side, there’s a lot happening in the UK and Asia this week which may influence price, potentially leading to a break of the aforementioned technical levels.
• Tomorrow, RBA Governor Stevens is due to talk at 0840 AEST – last week the RBA governor reiterated his bearish stance on the Australian dollar, leading to another sell-off in the volatile currency. Speaking in New York, the governor stated that the AUD will ‘very likely fall further’. He also noted that Sydney house prices ‘look rather exuberant’ but one city cannot dictate policy for the entire economy; adding that an interest rate cut ‘has to be on the table’. We expect the RBA to maintain this bearish view on the aussie.
• UK preliminary Q1 GDP – exp. 0.5% q/q
• UK Nationwide April House Price Index – exp. 0.2% m/m
• Australian Q1 Import Price Index – exp. 1.0%
• China April Manufacturing PMI – exp. 50
• Australian Q1 PPI