GBPAUD Looking to Breakout

Price action in GBPAUD is looking interesting here. The pair has been in range formation for months now, caught between support at 1.7218 and resistance at 1.7811. However, each test of the support level has been accompanied by growing bullish divergence in momentum studies. The pair is now once again testing upper support and, with AUD sinking currently, an upside break looks promising. Bulls can look for a topside break of the 1.7811 level targeting 1.8143 initially. Retail positioning, while still net-long, is reducing rapidly with short positions growing, further endorsing the prospect of an upside break.

Keep an Eye On

The current risk-off theme to markets is hitting AUD hard. While this narrative continues, we can expect GBPAUD to gain further upside momentum. Looking ahead to next week, the July RBA meeting will be the key focus. With a .5% hike baked in, there are risks of further AUD downside if the RBA doesn’t raise its level of hawkishness either in terms of a larger hike or a more hawkish outlook. On the other hand, if the RBA comes through with either of those, this will likely sap bullish momentum from the pair in the near-term.