GBP/AUD clings to 1.8600 after RBA, all eyes on UK Sevices PMI, Carney's Testimony

  • GBP/AUD trades little changed around 1.8600 during early Tuesday.
  • The pair witnessed pullback after RBA but is awaiting the British catalyst for further direction.
  • While 1.8570-65 can confine near-term declines, 1.8720 is a strong upside resistance to watch.

GBP/AUD trades near 1.8600 during early Tuesday. The pair recently bounced off 1.8570 after the Reserve Bank of Australia (RBA) cited trade tensions and household spending a major uncertainty while keeping the cash rate unchanged at 1.5%. Investors now await monthly readings of the UK Services PMI followed by testimony by the Bank of England (BoE) Governor Mark Carney. 

The RBA met wide consensus of leaving benchmark cash rate untouched during today’s monetary policy meeting. The Australian central bank further went on praising the low rates as a support to the economy where unemployment and inflation could improve gradually. However, uncertainty surrounding household spending and trade talks between the US and China were marked in red.

After the meeting, the Australian Dollar (AUD) declined against the British Pound (GBP). Though, monthly reading of the UK Services PMI and testimony by the BoE’s Carney are likely immediate catalysts for the pair traders to watch from now.

The February month Services PMI could disappoint Pound buyers if matching market consensus of 49.9 against 50.1 prior. BoE Governor Carney is to testify on Brexit, inflation, and the economy before the House of Lords Economic Affairs Committee where he might shed some light over Brexit uncertainty being a hurdle for the BoE’s monetary policy. The Governor may also discuss recent weakness in domestic data but might not risk conveying an extensive policy change.

For the Aussie traders, early Wednesday’s release of Q4 2018 GDP release will be crucial to watch. The growth figure is likely to increase by 0.4% from 0.3% rise during Q3.

GBP/AUD Technical Analysis

On the break of 1.8570-65 immediate support, the GBP/AUD pair might drop to 1.8500 while an upward sloping trend-line at 1.8390 could limit the quote’s further declines.

Alternatively, 1.8720-25 is likely nearby resistance for the pair, a break of which can propel it further towards 1.8850 and 1.8900 numbers to the north.

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