At time of writing, RBA Governor Glenn Stevens is talking optimistically about the Australian Economy following today's inflation data which partially hit target. (Headline inflation was below par but trimmed mean was on target)
Technically GBPAUD looks very strong and fundamental I suspect we have plenty of upside left here. Sterling' recent strength has been boosted by Carney's suggestion of rate rises being back on the table, which was given an extra helping hand when we see wage inflation (which tends to lead to inflation later down the track) also continues to gather momentum at an impressive pace. Later today we see MPC votes which would provide even further GBP strength if we see a dissenter or two return to favouring rate rises. Whilst this is an outside chance today it is something we have to at least consider.
On the other hand the Australian Dollar is being battered by strengthening US Dollar and plunging commodities. Even if inflation data is 'Okay' and Stevens is a little more optimistic about the economic recovery I do not see this alone being enough to turn the tide on GBPAUD unless we see a significantly weaker British Pound.
These forces combined make GBPAUD an idea buy-the-dip currency cross
We remain within a Bullish Channel with the recent sell-off from 2.126 highs facing a couple of zones of potential support, to help pin point the end of a correction.
D1 had already provided clues of weaker prices near the highs with a combination of Bearish Inside Days, Pinbar and Engulfing candles. Yesterday's low respected the 38.2% retracement around 2.087 but a break lower could find support around 2.077-82 area, where we find Monthly R1 Pivot, 50% retracement and Lower Bullish Channel.
Price action today suggests we could be in for a deeper retracement as I can see the downside is gathering momentum. So my plan here is to wait for this bearish momentum to calm down and either seek a basing pattern around lower support and / or a bullish buy signal on a lower timeframe.
GBPAUD remains within buy-the-dip territory
The downside move from recent highs suggests a deeper retracement is on the cards but the technicals and fundamentals point to a break to new highs over the coming sessions.