Date: 08 Oct 2018
Last week, UK Prime Minister May emerged from the Conservative Party conference with no further serious challenges to her leadership and fairly tame reviews of her dancing capabilities. However, the biggest supporting factor came from the European Union amidst reports that a Brexit deal could be “very” close and revised Irish border back-stop plans are moving in the right direction.
By far the major losers over the last week, as the Australian dollar derived no traction from a still neutral Reserve Bank of Australia (RBA) or mixed data in the form of dire building approvals versus better than forecast trade and retail sales. The enduring US-China trade fracture remained a persistent weight and intensified by the heightened yield advantage garnered by their US peer.
Since the beginning of October, the GBPAUD gained over 3.0% and is in a potential phase change, shifting from an accumulation to a bullish phase.
On Friday session, the GBPAUD rallied with a wide range and closed near the high of the day, in addition, the currency pair managed to close above the Thursday’s high, which suggests a strong bullish momentum.
The stochastic is showing an overbought market although is still displaying a strong bullish momentum.
After a choppy consolidation in September, GBPAUD bounced from the 2017 high at 1.7996 in early October and began a three-day rally that results in a new year-to-date high at 1.8608, shy above the 61.8 Fibonacci expansion and a potential break of a daily resistance. All seems to point north but the currency pair might pullback before another move upward.
GBP/AUD Daily Candlestick Chart
Written by Hugo O’Neill, External Analyst
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