GBPAUD at Key Resistance - 400 Pip Move Possible Either Way

Summary:

The GBPAUD dipped today after a strong rally from the mid-September lows near 1.7600 and now trades at a key resistance level.

The GBPAUD dipped today after a strong rally from the mid-September lows near 1.7600 and now trades at a key resistance level, with the next path showing a potential 400 pips in either direction.

Data out of the U.K. today showed a dip in consumer confidence and a third-highest budget deficit in the country, but these figures were largely in line with market expectations. The GBPAUD was -0.25% lower on the release and could mean the rally has run out of steam.

Brexit will still be a key driver of the GBPAUD pair in the next few weeks with the deadline for an agreement drawing near in mid-October. Boris Johnson had threatened to walk away from talks and then pushed through his Internal Market Bill that would alter the previous agreement with the European Union. A final vote is expected in Parliament in the days ahead of the deadline so we can expect volatility in the pound.

There was little in the way of data out of Australia this week but the U.K. saw solid numbers for retail sales and manufacturing, which has helped to underpin the pound. Next week’s calendar is also light for the Aussie and Sterling so Brexit will likely be the key driver in the days ahead with the deal deadline only three weeks away.

GBPAUD Technical Outlook

GBPAUD was higher again this week as sterling bounces back from lows in mid-September. I said in my last article on the pair that the bounce through two support levels suggested a rally to the moving average and this was the case. The action around this level will decide whether we go to the 1.8400 resistance or seek a retreat back towards the lows. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.