GBP/AUD, GBP/USD Breakouts (or Breakdowns) Linger after UK GDP
- UK GDP continues to grow, just not as fast as expected.
- GBPAUD and GBPUSD near decision points ahead of event risk.
- Forex economic calendar winds down with US Consumer Confidence.
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The UK economy is growing at its fastest pace in four years but that's done little to help the British Pound shake off its low volatility shackles, having been constrained to a 100-pip range versus the US Dollar since April 16.
There is a very clear ascending triangle that's formed on the GBPUSD daily/H4 timeframes, and while we are biased for a break higer in context of the move through the 2008-2011 trendline back in October, there are implications to the low volatility environment. Accordingly, should we see a rise in volatility alongside a break of the recent $1.6755/855 range, we would look to take that change regardless direction - a regime change could be developing.
While waiting for GBPUSD to decide its next direction, GBPAUD may be a good indicator of what's to come. GBPAUD had been engaged in a potential topping pattern dating back to December, but the recent rally from the April 15 low now challenges both the neckline of said topping pattern as well as the descending TL from the January and March 2014 highs; bulls will be more comfortable above A$1.8220 while bears will be more comfortable below 1.8115.
Watch the video for a more detailed explanation and a look at the charts.
--- Written by Christopher Vecchio, Currency Analyst
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