GBPAUD is testing a support zone around its 200hr SMA and prior trend line resistance. Recent AUD strength on the back of a somewhat more neutral than expected tone from the RBA has outweighed GBP gains and propelled GBPAUD lower. GBPUSD is finding some sticky ground around the top of its short-term channel, which could be feeding into pound crosses.
Nonetheless, GBPAUD remains in a broad upward trend. A push off its aforementioned resistance zone may see the pair retest the top of its short-term channel, while a break lower may see it test channel support (see chart).
From a fundamental perspective, the Aussie has been bolstered by lower than expected Chinese CPI data (actual 2.7%, prior 2.8%). However, its long-term prospects may not be so bright. In its quarterly monetary policy statement the RBA downgraded its growth forecast for the economy in 2013 and warned about fiscal consolidation hurting growth in the future. The RBA lowered its 2013 growth forecast to 2.25%, from 2.5% in May. The bank also reiterated that the jobless rate may increase from 5.7%. Nonetheless, given the lack of growth outside of the mining sector and an expected decline in mining investment, the Australian economy may be heading for a rough patch, which may result looser monetary policy down the road and, in turn, a weaker Australian dollar.
Resistance
1.7150
1.7260
1.7340 – high since August 2010
Support
1.7000 – trend line support and 200hr SMA
1.6945 – channel support
IMOH, Clement I.
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