Sterling is still in “wait and see” mode as the deadline for an EU-UK trade deal has been unofficially passed. While the prospects for a deal look a little brighter, the core issues are still largely unresolved and the time for a deal is running out, as officials still need more than a week and the technical time for EU and UK ratification is shrinking. In that regard, the two sides seem likely to rush into a deal this week, which could have material implications for the Pound, with UK data playing a secondary role this week.
The RBA cut interest rates and expanded quantitative easing two weeks ago, but questions about whether they have run out of firepower remain open. Lowe seems to be very cautious and the message remains extra-dovish. Regarding currencies, so far Lowe said the AUD is in line with the fundamentals which have a big effect on AUD.
GBPAUD has been trading in the range 1.8000-1.8250 after the 50.0% Fib retracement from the low price rally movement of 1.7492 to 1.8525, but has ample room for movement this week. On the upside, the price 1.8265 will be the determinant; in the case of a break of this level the price has the possibility to test the 1.8500 area. On the downside, there is support at 1.7935, otherwise the price will continue the correction to lower levels at 61.8% fib.
Ady Phangestu – Market Analyst – HF Educational Office – Indonesia
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