GBPAUD has been forming lower highs and higher lows, creating a symmetrical triangle pattern on its 1-hour forex time frame. Top-tier events from the UK economy this week could determine which direction this pair might break out.
As for technical indicators, the 100 SMA is still below the 200 SMA for now so the path of least resistance is to the downside. This suggests that the top of the triangle around 2.0800 might continue to keep gains in check, allowing price to test the triangle support at 2.0700.
A break below that area could push GBPAUD lower by an additional 350-400 pips, which is the same height as the chart formation. Stochastic is on middle ground but pointing down while RSI is also poised to head south, indicating that price action could follow suit.
For today, the UK CPI is up for release, with the headline figure expected to hold steady at 0.1% and the core figure likely to stay unchanged at 1.2%. Underlying inflation data such as PPI, HPI, and RPI could also provide clues on future inflation trends and their implications on BOE policy biases.
Earlier today, China printed its GDP reading for Q4, which turned out to be slightly weaker than expected at 6.8%. Industrial production was also below expectations at 5.9% versus 6.0%, down from the previous 6.2% figure. Fixed asset investment and retail sales were also lower.
Later on, UK retail sales and jobs figures are up for release, with traders looking for signs that the slump in commodity prices might translate to stronger consumer spending. Still, weaker than expected data might be enough to push GBP lower against its counterparts.