GBPAUD has been trending lower, moving below a descending trend line connecting the latest highs of price action. 

The pair seems to be in the middle of a pullback and using the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the trend line. 

In addition, the highest Fib also coincides with the 100 SMA, which is below the 200 SMA and indicating that the downtrend is set to carry on. The moving averages are edging farther apart, suggesting a pickup in bearish pressure.  

If any of the Fib levels hold as resistance, price could head back to the recent lows at the 1.9900 major psychological support. On the other hand, a break above the trend line and Fib resistance around the 2.0400 area could signal a potential reversal. 

Data from the UK has been mixed when it comes to jobs and inflation reports. The headline CPI came in line with expectations and rose from 0.2% to 0.3% while the core CPI fell from 1.4% to 1.2%. UK claimant count decreased more than expected but the jobless rate was unchanged at 5.1% and the average earnings index fell from 2.0% to 1.9%. 

UK retail sales data is due today and another weak reading could mean more pound losses. Analysts are expecting to see a 0.8% rebound from the previous 1.0% decline, although the weakness in wage growth could weigh on consumer spending. 

As for the Australian dollar, commodity prices and overall risk sentiment appear to be the major drivers of price action. Dashed hopes of an oil production freeze agreement weighed on risk appetite recently, dragging the Aussie lower, but continued attempts to reach a deal could renew support for commodity currencies. 

By Kate Curtis from Trader’s Way