Technical Sentiment: Bullish
Key Takeaways
- U.K. Manufacturing PMI surges to 57.3;
- Later today AUD PPI is expected to post a quarterly increase to 0.6%, from 0.2% in January;
- GBP/AUD remains bullish, with targets around 1.8275 and 1.8400.
The British Pound received another boost after Manufacturing PMI surged to 57.3 in April. GBP/AUD maintains a strong bullish trend, with consistent higher lows in the last three weeks of trading. The expected AUD PPI increase is likely to be priced in the uptrend, consequently only a better than expected report will deter the pair from moving any higher.
Technical Analysis
GBP/AUD is currently trading around 1.8210, near the two tops set on Tuesday and Wednesday at 1.2820. The pair is in bullish territory, well above the 200 Simple Moving Average on the 4H timeframe and it has stabilized above the price pivot zone at 1.8121.
The only set-back for the current bullish trend configuration is the failure to create a meaningful higher high above 1.8220. Another rejection in this area will create a triple top formation in the short term, bringing up the possibility of a deeper correction towards 1.8050 or 1.8000 large round number. This move will be also signaled if the pair breaks below 1.8130 and makes a short term lower low.
Towards the upside GBP/AUD has a decent target around 1.8280, created by two Fibonacci retracement levels. The real resistance is a major pivot zone and Fibonacci confluence between 1.8370 and 1.8400, where the uptrend is likely to reverse given the overbought conditions of Stochastic on the Daily timeframe.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets
