ASX 200
The pound to AUD (GBPAUD) pair is little changed today as traders remain focused on Brexit and the rising number of Covid-19 cases in the UK. It is trading at 1.8225, which is higher than yesterday’s low of 1.8175.
The UK has been seeing rising number of Covid-19 cases, as shown in the chart below. Yesterday, the country confirmed more than 19k cases after confirming more than 15k cases a day before. The daily number of cases has remained above 10,000 in the past one week.
As a result, London announced more measures to cripple the spreading of the disease. In a statement yesterday, London mayor, Sadiq Khan said that the city will move to a higher tier of lockdown. This move will discourage people from unnecessary movements and reduce the number of gatherings.
Subsequently, the move will cripple the ongoing recovery in the UK even as the unemployment rate rises. The situation will worsen after the government ends its furlough program.
Meanwhile, the pound to AUD is also reacting to the optimism on Brexit. The UK and the EU are expected to continue deliberations as yesterday’s deadline passed. There are hopes that the two sides will reach an agreement before the real deadline of December 31st. Furthermore, the main contentious issues have already narrowed down to just 3. These are on fishing, regulations, and government support for companies.
The 30-minute chart shows that the pound to AUD price has been rising since yesterday, when it dropped to a low of 1.8175. The price has moved from the 38.2% Fibonacci retracement level and crossed the 25-day and 15-day exponential moving averages. The GBPAUD has also formed what seems to be a bearish flag pattern.
Therefore, I suspect that the price will resume falling as bears target yesterday’s low of 1.8175. On the flip side, a move above the 23.6% retracement level at 1.8245 will invalidate this trend.
