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GBP/AUD Sellers Target Deeper Declines Amid Rate Cut Speculation

GBP/AUD Sellers Target Deeper Declines Amid Rate Cut Speculation

Market Overview

On Thursday, GBP/AUD faced increased selling pressure as the British pound continued its slide against the Australian dollar following comments by Bank of England (BoE) Governor Andrew Bailey. In an interview with The Guardian, Bailey hinted that the BoE could move faster on rate cuts if inflation data continues to improve, leading to growing market expectations for a 25-basis-point rate reduction in November and December. As a result, the pound weakened, and sellers targeted deeper declines against the Australian dollar.

The Australian dollar, on the other hand, remained supported by strong trade balance data for August, despite a drop in both imports and exports. Investors now await Friday’s housing loan data from Australia, which could provide further momentum to the Aussie if it beats expectations.

Technical Analysis

In the daily time frame, GBP/AUD remains in a confirmed downtrend, with bearish momentum intensifying. The pair has broken below its previous ascending support line, signaling a continuation of the broader downward move. Additionally, the weighted moving average has acted as a dynamic resistance, further limiting upside attempts.

The pair is also trading below the Ichimoku cloud, with the Chikou Span (green line) positioned beneath both the candles and the cloud, highlighting the overall market weakness. The bearish cross of the Kijun-Sen (red line) and Tenkan-Sen (blue line) supports the ongoing selling pressure.

Price is approaching key Fibonacci retracement levels, with immediate support at 1.91553. A break below this level could open the path toward deeper support at 1.90766 and ultimately 1.89292. The RSI is nearing oversold conditions, suggesting a potential short-term corrective bounce; however, the broader trend remains bearish unless a sustained break above resistance occurs.

Upside resistance is seen at 1.92101, which represents a significant level that could act as a reversal point. Should the pair fail to hold below this resistance, the next levels to watch are 1.93150 and 1.95079. The bearish outlook remains intact as long as the price stays below 1.97008.

Alternative Scenario

In the event that buyers manage to regain control and push the price above the key resistance at 1.97008, the bearish outlook would be invalidated. A break above this level would suggest the potential start of a new bullish trend, with upside targets shifting toward higher resistance levels.

Technical Indicators Summary:

RSI: Nearing oversold, signaling possible short-term bounce.

MACD: Bearish, confirming downside momentum.

Moving Averages: Bearish, with price trading below key levels.

Key Levels Overview
Resistance Levels:

  • Resistance 1: 1.92101
  • Resistance 2: 1.93150
  • Resistance 3: 1.95079
  • Resistance 4: 1.97008
    Current Price: 1.91900
    Support Levels:
  • Support 1: 1.91553
  • Support 2: 1.90766
  • Support 3: 1.89292

Key Events to Watch

For the British pound, the focus remains on the Services and Composite PMI data, expected later today. Analysts anticipate a further decline compared to the previous period, which could exacerbate the pound’s weakness, especially if the slowdown in economic activity persists. Additionally, any dovish signals from the Bank of England, particularly around potential rate cuts, will likely weigh further on the GBP.

For the Australian dollar, the primary event to watch is the Housing Loans report on Friday. A stronger-than-expected reading could lend further support to the AUD and reinforce the selling pressure on GBP/AUD.

Conclusion

The GBP/AUD pair is facing mounting selling pressure, with the bears aiming to push the price toward key support at 1.91553. A break below this level would open the door to further downside, with 1.90766 and 1.89292 as the next targets. On the other hand, any recovery would need to clear the resistance at 1.97008 to invalidate the bearish scenario and signal a potential trend reversal. Investors should monitor upcoming economic data from both the UK and Australia, as they could influence the direction of the pair. A weak UK PMI or dovish commentary from the Bank of England could accelerate the pound’s decline, while strong housing data from Australia could further boost the AUD.

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