GBP/AUD Advances Ahead of Australian Labor Market Reports

Market Overview

The GBP/AUD currency pair has been trending higher amid a mix of fundamental and technical factors influencing both currencies. While the Reserve Bank of Australia (RBA) has yet to confirm an early rate cut, market expectations for such a move in February have increased significantly. Traders have raised the likelihood of a 25-basis-point cut from nearly 50% on the previous day to 62%, reflecting heightened speculation. Despite this, the RBA has a history of defying premature market predictions, often leading to adjustments in investor expectations later.

On the other hand, the Australian dollar is navigating potential headwinds as China’s economic policy discussions begin today. Supportive measures arising from these discussions could have broader implications for the Australian economy, given China’s position as its largest trading partner. Meanwhile, the British pound continues to exhibit resilience, benefiting from relatively stable domestic conditions and a favorable risk sentiment.

Technical Analysis

On the 30-minute chart, GBP/AUD maintains a clear upward trajectory. Despite some waning momentum in recent sessions, hidden bullish divergence between the RSI and price action suggests the potential for continued gains. Buyers have successfully breached the previous peak at 2.00535 and are now challenging the immediate resistance level at 2.00684. Overcoming this critical barrier could pave the way for further upside, with targets at 2.00873 and the more significant resistance at 2.01082.

Oscillators Confirmation

Momentum indicators align with the bullish scenario. The RSI remains in positive territory, confirming the strength of buying pressure without signaling overbought conditions. The MACD histogram also points to bullish momentum, with its signal lines continuing to rise. Furthermore, the alignment of moving averages reinforces the upward bias, as shorter-term averages remain above their longer-term counterparts.

Alternative Scenario

In the event of a pullback, sellers would need to break through the immediate support level at 2.00326. A decisive move below this level could lead to further declines, potentially targeting the psychological support level at 1.99988. Such a scenario would mark a shift in sentiment, bringing the recent uptrend into question.

Key Levels

• Resistance Levels: 2.00684, 2.00873, 2.01082
• Support Levels: 2.00535, 2.00326, 1.99988

Key Events to Watch

Market participants are closely monitoring the ongoing policy meetings in China, which could introduce economic stimulus measures with significant implications for Asian and Oceanic currencies. Additionally, Thursday’s Australian labor market report is expected to show a rise in unemployment, a development that could heighten volatility in the GBP/AUD pair. Given the interconnectedness of these factors, the currency pair is likely to remain sensitive to shifts in market sentiment and policy announcements.

Conclusion

GBP/AUD remains in a bullish structure, with immediate resistance at 2.00684 representing a critical level for further gains. A break above this level could lead to tests of higher targets, while failure to hold above support at 2.00326 may signal a reversal of the current trend.

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