GBPAUD has formed lower highs and higher lows on its daily time frame, creating a symmetrical triangle formation on the long-term chart. 

Price just bounced off the triangle resistance and could be due for another test of support.

Stochastic is pointing down to confirm that sellers are taking control of price action. If bearish pressure is strong enough, traders could push for a break below support at 1.6300 and a corresponding 1,800-pip selloff, which is the same height as the triangle formation.

The 100 SMA is below the 200 SMA on this time frame so the path of least resistance is downwards. Also, the 100 SMA lines up with the triangle resistance, adding to its strength as a ceiling. The gap between the moving averages is widening so bearish pressure is getting stronger.

In their latest policy statement, the BOE refrained from making any changes to interest rates or bond purchases as expected. The central bank raised its GDP forecasts while keeping inflation estimates unchanged, signaling that they are in no rush to tighten monetary policy.

Meanwhile, the Aussie is being weighed down by weaker than expected Chinese Caixin manufacturing PMI, which dipped from 51.9 to 51.0 instead of 51.8. This forced the currency to return some of its gains after seeing stronger than expected trade balance and building approvals data in the previous day.

UK services PMI is up for release and a fall from 56.2 to 55.8 is expected. Stronger than expected data could still shore up the pound while downbeat results could push the UK currency lower.

By Kate Curtis from Trader’s Way