GBPAUD continues to trend higher, moving above an ascending trend line connecting the lows since early September. Price looks ready for another trend line test soon and this support area lines up with a former resistance around 1.7500.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. This means that the uptrend is more likely to continue than to reverse. The 200 SMA is just slightly below the trend line, adding another layer of support in the event of a larger dip.
Stochastic is already indicating oversold conditions to show that sellers are exhausted. The oscillator has yet to pull higher to reflect a pickup in bullish pressure that could allow a bounce to happen. A bullish divergence can also be seen as price made higher lows while stochastic had lower lows.
UK data has turned out stronger than expected so far, with headline CPI up from 3.0% to 3.1% instead of holding steady as expected and core CPI steady at 2.7%. PPI was also stronger than expected but RPI and HPI fell short.
Jobs data is due next and a smaller gain of 0.4K claimants is eyed compared to the earlier 1.1K increase. Also, the average earnings index is projected to advance from 2.2% to 2.5% to reflect stronger wage growth and more upside inflationary pressure.
This could set up for an upbeat BOE statement later in the week, even as the central bank is widely expected to keep rates on hold. As for the Aussie, rising gold prices are propping it up but the upcoming jobs report could still pose an event risk. An increase of 18.1K in hiring is eyed, much larger than the earlier 3.7K gain.
By Kate Curtis from Trader’s Way