GBPAUD has been on a steady downtrend but just enjoyed a nice pop higher after the release of today’s set of data from Australia and the UK. This opens the possibility of a correction to the trend line visible on the 1-hour and 4-hour time frames.
Using the Fib tool on the latest swing high and low shows that the 50% Fibonacci retracement level is in line with the trend line and near the 2.0700 major psychological level. This might hold as resistance, allowing GBPAUD to resume its selloff.
The 100 SMA is below the 200 SMA on the 4-hour chart, signaling that the path of least resistance is to the downside. However, stochastic and RSI are both on the move up, which means that buyers are in control of price action for now.
Earlier on, the Australian trade balance release printed weaker than expected results, as a wider deficit was seen due to the 3% decline in exports. Meanwhile, the UK had its first piece of good news all week when its services PMI beat expectations.
Still, the BOE seems to have shifted to a less hawkish stance while the RBA has been sounding less downbeat. The Chinese yuan’s addition to the IMF SDR might also yield positive prospects for the Australian economy, as the inflow of funds to China could spur demand for commodity trade.
Up ahead, Australia is still set to print its latest retail sales report and strong results could yield to another leg higher for the Aussie. Analysts are expecting to see a 0.4% gain but a higher reading could allow GBPAUD to drop back to the previous lows below 2.0400.