GBP/AUD: Rally to run out of steam as RBA looks ahead for a favourable outlook – DBS Bank
|GBP/AUD has placed a strong show of strength from January’s 1.7417 lows, registering an 8.9% gain at its recent 1.8973 highs. Nonetheless, GBP/AUD’s rally faces a formidable resistance pegged at 1.9137, which houses a 50% Fibonacci retracement, as Benjamin Wong, Strategist at DBS Bank, notes.
The RBA thinks that Delta variant will pass, and the economy will stage a quick rebound
“The Reserve Bank of Australia (RBA) is expecting that once the covid restrictions end, the economy would stage a quick rebound as it revised down its 4Q GDP forecast by 0.75% but revised up 2022 by a similar quantum.”
“Australia is currently dispensing 1.42 M doses each week. At this rate, 70% of Australian adults (55% of the entire population) would be fully vaccinated in November, against the current 18.6% fully vaccinated.”
“The weekly Ichimoku chart shows GBP/AUD is staring right at a 1.9137 cloud resistance. The technical indicator is starting to moderate its strength, as incidentally 1.9137 houses a 50% Fibonacci retracement of the late March’s collapse from 2.0856 into the gulley low of 1.7417.”
“The cross spent a lot of time consolidating between 1.8527-1.7417 since June 2020, before the current burst higher. The move higher appears to be a corrective three price leg constituting abc, where a break of the wedge pattern would well force the cross to correct itself some of its recent gains.”
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