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GBP/AUD Faces Downward Volatility Amid Key Support Break

GBP/AUD Faces Downward Volatility Amid Key Support Break

Market Overview

With the release of the UK’s inflation data coming in as expected, the market anticipates that the Bank of England (BoE) will keep interest rates steady at its upcoming meeting. This could lead to a period of stabilization for the British pound. However, a broader sense of risk appetite across global markets is likely to strengthen the Australian dollar. The Federal Reserve’s anticipated rate cut may reduce borrowing costs and stimulate market activity, offering a potential tailwind for risk-sensitive currencies like the AUD.

Technical Outlook

On the daily chart, GBP/AUD has broken below the key support at 1.94910 and is now trading beneath the 34-period moving average. This indicates that sellers have control of the market, pushing the pair lower. The current price is testing the immediate support at 1.94599. Should sellers succeed in breaking through this level, the next downside targets lie at 1.94204, followed by 1.93768 and the more significant support at 1.93062.

On the flip side, for any bullish reversal to take place, buyers would need to push the price above the critical resistance at 1.96052. Only a decisive break above this level would signal a shift in market sentiment.

Oscillator Confirmations

RSI: Neutral, indicating neither overbought nor oversold conditions, which could lead to continued downward pressure if it starts moving lower.

MACD: Bearish, as the MACD lines remain below the signal line, pointing to continued selling momentum.

Moving Averages: Mixed signals from the moving averages suggest the market remains biased toward the downside, with the price trading below the 34-period moving average.

Key Levels Overview

  • Resistance Levels:
    • Resistance 2: 1.96052
    • Resistance 1: 1.94910
    • Current Price: 1.94610
  • Support Levels:
    • Support 1: 1.94599
    • Support 2: 1.94204
    • Support 3: 1.93768
    • Support 4: 1.93062

Key Events to Watch

Investors should focus on two significant events that could shape the direction of GBP/AUD in the coming days:

Bank of England Meeting (Thursday): The BoE is expected to hold rates steady, but any surprises in their forward guidance could spark volatility. A more hawkish tone would support the pound, while a dovish stance could exacerbate its weakness.

Australian Labor Market Report (Thursday): Australia’s job data could significantly impact the AUD. Stronger-than-expected employment figures would likely boost the currency, while disappointing results could lead to further downside for the Aussie.

Conclusion

GBP/AUD remains in a downward trajectory attempting to keep below the crucial support at 1.94910, signaling that sellers maintain control of the market, with immediate support at 1.94599.

If the pair breaks below 1.94599, further downside targets include 1.94204 and 1.93768, with a potential move toward 1.93062 in a continued bearish scenario.

However, if buyers manage to push the price back above 1.96052, a reversal could be on the horizon. Market participants should closely monitor the Bank of England’s decision and Australia’s labor market data, as these will likely determine the pair’s next move.

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