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GBPAUD READY TO DROP?

FX:GBPAUD   British Pound / Australian Dollar
After being trapped for over a month between 1.8000 and 1.7750 is GBPAUD ready to drop to new lows?

Well last week we witnessed the pound in the spotlight with wage growth slowing, inflation missing expectations and retail sales surprisingly worse than expected.

The week prior to that we had sudden resignations from David Davis and Boris Johnson, some high profile figures in Theresa May's conservative party.

This week is relatively light in terms of GBP fundamentals, however be aware and keep an ear out on Brexit developments.

From a technical perspective, the Pound made steady increases back up to the weekly key level of 1.7750 this is largely due to the Aussie's continued weakness, however towards the back end of last week we saw really positive employment figures give light to the Australian Dollar and has brought some strength to it.

In the early hours of tomorrow we have the Australian CPI 0.05% figures coming out, if we do see an increase (YoY) it could make a case for the RBA to view rate hikes at some point over the next few quarters.

As we take a look at the chart work above, we can see a descending trend-line being met for the 3'rd time, this is in confluence with a push back inside the refined fib region between 78.6% and 61.8% retracement levels. A pop back below and out of the highlighted box range could give us the indication we need to enter a short position down to our extension levels that line up perfectly with our monthly key support level , 1.75000
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