Strong selling momentum brings GBP/AUD down to a recent swing low and breaks thanks to recent news from the U.K. and Australia. Fake out or breakout ahead?
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Fresh Market Headlines & Economic data:
- IHS Markit Eurozone Composite PMI Final: Growth edges lower at start of 2019
- Volume of retail trade down by 1.6% in euro area; Down by 1.4% in EU28
- EU ‘intransigence’ could mean no-deal Brexit, says DUP
- U.K. Services PMI: New orders decline for the first time in two-and-a-half years
- Australia’s December trade surplus widens sharply
- Australian retail sales in shock contraction for December
- RBA Seen Riding Out Australia Property Slump If Jobs Stay Robust
Upcoming Potential Catalysts on the Forex Calendar:
- Reserve Bank of Australia’s Lowe speaks in Sydney at 1:30 am GMT (Feb. 6)
What to Watch: GBP/AUD
Sterling pairs are definitely the ones to watch today after another weak PMI read from the U.K. signaling slowing economic conditions ahead. The momentum is strong and with a lack of any top tier events on the forex calendar for the rest of the U.S. session, this momentum could possibly carry on into the Tuesday close.
We’re watching GBP/AUD not only on the fresh U.K. catalyst, but also on the bullish AUD momentum, a reaction to the latest RBA monetary policy meeting (still not likely to cut rates if jobs stay robust) and other top tier Aussie events during the Asia session. Again, no major scheduled events ahead, so the odds are good that sentiment won’t be derailed for at least the rest of this session.
The pair retested a minor support area around 1.7950 and is breaking. It doesn’t look to be slowing down so if you’re a bear on the pair, watching for a hold below 1.7950 to take your shot. If you’re a bull, the situation is not a good one for you unless a bullish Brexit headline appears to help break the pair back above the 1.8000 handle.