GBP/AUD Sellers Eye Opportunities to Extend Declines
Market Overview
During Thursday’s session, a stronger-than-expected trade balance report from Australia bolstered the Australian dollar, reflecting its resilience as a commodity-exporting currency. Conversely, the British pound remained under significant pressure due to lingering concerns over the UK government’s borrowing levels. Sterling has continued its downward spiral, reaching its lowest point since April of the previous year. This decline mirrors the sharp sell-off in UK bonds and currency last observed during the September 2022 “mini-budget” crisis under former Prime Minister Liz Truss. The pound’s dramatic fall highlights the vulnerabilities stemming from fiscal uncertainty and rising debt levels.
Technical Analysis
On the 1-hour chart, GBP/AUD has continued its bearish momentum, breaking below the critical support level at 1.98671. This breakdown has paved the way for further declines toward the immediate support at 1.98267. Should sellers successfully push below this level, the next target lies at 1.98018. Momentum oscillators, including RSI and MACD, corroborate the bearish sentiment, with MACD maintaining a downward trajectory and RSI approaching oversold conditions.
However, the RSI nearing oversold territory suggests the possibility of a brief pause in the decline, allowing for potential consolidation before resuming the downward trend. On the flip side, buyers aiming to invalidate the bearish outlook must first reclaim the resistance at 1.98920. A decisive break above this level would position the pair to test the higher resistance at 1.99324, signaling a shift in market sentiment.
Key Levels to Watch
- Resistance Levels: 1.98493, 1.98671, 1.98920, 1.99324
- Support Levels: 1.98267, 1.98018
Fundamental Drivers
The contrasting macroeconomic landscapes of Australia and the UK further support the divergent trajectories of their currencies. Australia’s robust trade performance underscores its export-driven resilience, whereas the UK faces fiscal challenges amplified by concerns over government borrowing. The UK’s financial outlook has reignited memories of past crises, deterring investors and exacerbating downward pressure on the pound.
Looking ahead, economic data and developments related to fiscal policies in the UK could further impact GBP/AUD. Australian dollar strength could persist if global demand for commodities remains robust and domestic economic data continues to outperform expectations.
Conclusion
The GBP/AUD pair remains firmly in a bearish trend, with sellers targeting further declines toward 1.98267 and potentially 1.98018. While oversold RSI levels suggest a possible pause or minor retracement, sustained bearish momentum could see these support levels tested. Buyers must break above 1.98920 to challenge the bearish structure, with further gains contingent on surpassing 1.99324.
Find us on
