The GBPAUD pair faces a nuanced trajectory influenced by divergent economic performances. The recent contraction in the UK’s GDP by 0.3% in October, coupled with weaker-than-expected job data, reflects economic struggles, amplifying speculation of potential BoE interest rate cuts. Conversely, TD Securities’ forecast favours the Australian Dollar, foreseeing a robust 2024 owing to China’s stimulus-driven growth.
Amidst the UK’s service sector contraction, including notable declines in information and communication, coupled with production and construction setbacks, the Pound is under strain. Conversely, the Australian Dollar benefits from expectations of a recovering Chinese economy, less aggressive rate hikes by the Reserve Bank of Australia, and a global risk-on sentiment.
Technical Analysis:
The GBPAUD pair is currently at 1.91095, with the price action lower following the rejection of the supply zone higher. Trading around key SMAs – 20-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line) – indicates a neutral stance. The convergence of the 20-SMA with the 50-SMA and 100-SMA denotes a potential consolidation.
RSI at 48.91 signifies a flat momentum. Short-term trading opportunities may emerge if the price sustains a push below SMAs, targeting initial support at 1.90599. Further downward momentum could bring the 1.90037 support level into play. Conversely, sustained support from the SMAs might trigger a move towards the 1.91747 resistance level, potentially validating bullish momentum towards 1.92208.
Summary:
GBPAUD faces a pivotal juncture. The UK’s economic woes may pressure the Pound, potentially leading to BoE rate cut speculation. Conversely, Australia’s positive growth outlook might sustain the Australian Dollar.
The technical outlook hints at potential short-term movements, with support at 1.90599 and resistance at 1.91747 as key levels to watch, dictating potential trading opportunities. The pair’s direction will likely pivot on economic releases and central bank decisions, especially the Fed’s and BoE’s forward guidance, shaping market sentiment and influencing the Pound-Aussie dynamics.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, MT Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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