GBP AUD

Amid global volatility, key levels on these Aussie crosses continued to be respected. We look at potential setups as we enter the new trading week.

There’s a lot of excitement in Chinese markets about the latest stimulus measures to address flagging economic growth. Given it’s often used as a proxy for those traders looking to play China without directly investing in China, this type of environment should benefit cyclical currencies such as the Australian dollar.

GBP/AUD is rarely as overbought as it is right now. And when it has been this overbought in the recent past, it’s usually coincided with a near-term top.

Considering the rally in cyclical assets following the soft US inflation report, the steep reversal in AUD/USD comes across as a little strange. As long as economic growth holds up, the prospect of Fed rate cuts should provide tailwinds for cyclicals. Therefore, the reversal has created a short setup. But not against the US dollar.

Attempts to ram EUR/AUD and GBP/AUD into higher trading ranges failed last week, suggesting the Aussie dollar may be starting to rediscover its mojo against some major European crosses.

S&P global release their flash PMI reports for the major regions today. And with PMI reports from Europe and US, it places EUR/USD onto trader's radars.

With plenty of major data and central bank speeches scheduled in the UK and Australia this week, the next few days may prove to be critical for the medium-term trajectory for GBP/AUD heading into 2024.

The GBP/AUD uptrend faces a string of big tests over the next 24 hours, potentially influencing the outlook for interest rates from the BoE and RBA.

WTI crude oil has pulled back into the support zone highlighted in yesterday's report for a potential move to $90. We also look at GBP/AUD, as it may have printed a multi-month top and the daily chart also appears on the cusp of a breakdown.

GBP/USD has looked healthier on the charts, closing below a key support zone on Thursday. Downside risks for GBP/AUD are also growing.

USD/JPY was rising on the back of USD strength earlier in the Asian session, with USD/JPY seemingly trying to close its large weekend opening gap ahead of US CPI data. GBP/AUD has also caught our eye as its 3-wave retracement is trying to form a base around a support cluster.