GBPAUD Continues On

The recent GBPAUD breakout trade is now on course to hit the second target at 1.8739. Following the test of the initial target at 1.8578 we saw price consolidating briefly, while still well above the breakout base. Price has now turned higher again, initiating a breakout above the bear channel. With this in mind, the focus is firmly on further upside with 1.8739 the next target and 1.8982 the broader target beyond.

The turn lower in risk assets this week, as a result of fresh COVID fears, has hit AUD, allowing for the pair to continue higher. With fears over the new COVID strain likely to intensify over the weekend, there is plenty of room for GBPAUD to continue lower next week, backed up by retail trading data which currently shows this section of the market to be around 80% short.

Keep an Eye On

Little in the way of key data for either GBP or AUD next week. This means flows are likely to remain highly linked to movements in the risk complex, driven by developments in the COVID space. Make sure to keep an eye on incoming news over the weekend which will set the tone for early trading next week. Later in the week BOE’s Bailey will speak, this has the potential to be bullish for GBP given recent data strength (particularly inflation).