GBPAUD has been on a strong climb recently and may have enough momentum to break past its symmetrical triangle resistance around 1.7200. The chart pattern spans 1.5900 to 1.7700 so the resulting uptrend could be of the same size.
The moving averages are still oscillating to reflect consolidation action on the daily time frame but the 100 SMA is starting to cross below the longer-term 200 SMA to signal that the path of least resistance is to the downside. This means that the resistance is more likely to hold than to break.
If so, GBPAUD could head back to the triangle support currently at 1.6500-1.6600. Stochastic is heading north but is already in the overbought zone, so profit taking could force the rally to pause.
UK economic data turned out better than expected, though, as the economy grew by 0.4% in Q3 according to the preliminary GDP release. This is higher than the estimated 0.3% expansion and the earlier 0.3% growth figure.
Meanwhile, the Aussie was previously weighed down by weaker than expected quarterly CPI. Headline inflation rose 0.6% versus 0.8% while the trimmed mean CPI was up 0.4% versus 0.5%. This could keep a lid on RBA tightening expectations while rising inflation in the UK increases the pressure on the BOE to act.
Earlier today, Australia reported a 1.6% slump in import prices for Q3, further weighing on inflation prospects. Only the CBI realized sales index is lined up from the UK but a drop from 42 to 14 is eyed, which might be pound bearish.
By Kate Curtis from Trader’s Way