GBPAUD Begins Another Leg Lower After Resistance Holds

Summary:

The GBPAUD pair was heading lower after running into resistance at the start of the week. Brexit fears are leading to pound selling.

The GBPAUD pair was heading lower after running into resistance at the start of the week. The Aussie is finding buyers after further Brexit tension hit the price of sterling.

There was hopeful talk from the trade negotiators at the start of the week but now there is talk in the U.K. media that the two sides are far apart on state aid. The EU has also launched legal action against the pound over the controversial Internal Markets Bill. A formal notice was issued by EU Commission president Ursula von der Leyen, which accused the UK government of acting in “bad faith”. The bill introduced by Boris Johnson has passed parliament and seeks to alter the original agreement.

The U.K. saw Manufacturing PMIs coming in at 54.1 for September. The number was strong but slightly lower than the 54.3 expected and the market has shrugged it off to focus on Brexit risks. Australian manufacturing figures were also strong with a reading of 55.4 for September.

Australia and New Zealand are set to see the long-awaited introduction of the Trans Tasman bubble. Travellers could be allowed to fly from New Zealand to New South Wales without the need for quarantine as early as November. The move could help both countries restart their tourism and business economies.

GBPAUD Technical Outlook

GBPAUD was trading into the 1.7800s after resistance ahead of 1.8300 held on Monday. The pair has since pulled back and threatens a further drop to the 1.7700 support levels. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.