British Pound Technical Analysis: GBP/AUD, GBP/CAD, GBP/NZD Rates
British Pound Outlook:
- The Sterling-commodity currency crosses remain rangebound, as they have for many months now.
- GBP/AUD rates remain the most interesting of the three GBP-crosses reviewed in this report, continuing to linger below multi-decade trendline resistance.
- According to the IG Client Sentiment Index, the British Pound has a mixed bias.
Range Trading Persists
More rangebound price action in the British Pound may not be a surprise given recent price developments. Weakness by the Sterling has been met by an environment defined by weaker commodity prices, which has handicapped the commodity currency trio duly. As measures of volatility die out heading into the summer months, it may be the case that these GBP-crosses remain rangebound for the foreseeable future.
GBP/AUD RATE TECHNICAL ANALYSIS: WEEKLY CHART (July 2008 to May 2021) (CHART 1)
The weekly chart of GBP/AUD rates still shows how the pair is currently contending with two longer-term technical structures. From one perspective, GBP/AUD rates have been rejected at the descending trendline from the 2008 and 2015 highs, a trendline that it previously breached for a few weeks in 2020 before turning lower. The other perspective is that GBP/AUD rates are in the middle of a symmetrical triangle that’s formed with resistance measured from the 2015 and 2020 highs and support measured from the 2013 and 2016 lows.
GBP/AUD RATE TECHNICAL ANALYSIS: DAILY CHART (January 2020 to May 2021) (CHART 2)
GBP/AUD rates have carved out a series of ‘higher highs and higher lows’ in January, February, April, May, and now June. However, not all is sanguine. The pair is struggling to maintain its daily 21-EMA as support while testing the 23.6% Fibonacci retracement of the 2020 high/2021 low range at 1.8227. The turn in momentum is occurring as the pair had just found rejection at parallel channel resistance dating back to June 2020. A deeper retrenchment may develop before GBP/AUD rates ultimately fulfill their longer-term bullish technical potential.
GBP/CAD RATE TECHNICAL ANALYSIS: DAILY CHART (February 2020 to May 2021) (CHART 3)
More range trading has defined GBP/CAD price action in recent weeks. The pair continues to hug the 38.2% Fibonacci retracement (1.7121) as well as the ascending trendline from the August 2019 and December 2020 lows for several weeks. Momentum is fairly neutral. GBP/CAD rates are tangled among their daily EMA envelope, which is in neither bearish nor bullish sequential order. Daily Slow Stochastics are pulling back prior to reaching overbought territory, while daily MACD continues to rise towards its signal line while in bearish territory. More clarity is needed before a directional bias is ascertained.
GBP/NZD RATE TECHNICAL ANALYSIS: DAILY CHART (January 2020 to May 2021) (CHART 4)
GBP/NZD rates continue to coil into the vertex of the 10-month symmetrical triangle while playing ping pong the 23.6% (1.9287) and 38.2% (1.9760) Fibonacci retracements of the 2020 high/2021 low range, all the while riding along the ascending trendline from the October 2008 and August 2015 lows. Directional bias is lacking, as is momentum: the EMA envelope is in neither bearish nor bullish sequential order; daily MACD is flat, just above its signal line; and daily Slow Stochastics are flat, just above their median line.
--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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