Sterling technical analysis: GBP / AUD, GBP / CAD, GBP / NZD rate

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Pound sterling Outlook:

  • Sterling-commodity currency crosses remain at a distance, as they have been doing for many months now.
  • GBP / AUD rates remain the most attractive of the three GBP crosses examined in this report, continuing to linger below trendline resistance over several decades.
  • According to the IG Customer Sentiment Index, the pound sterling has a mixed bias.

Range trading persists

A more limited price development in the pound sterling is perhaps not a surprise given recent price developments. The weakness of the pound sterling was offset by an environment defined by falling commodity prices, which duly handicapped the commodity currencies trio. As the volatility measures subside as the summer months approach, it is possible that these GBP crosses will remain in a range for the foreseeable future.

GBP/EUR TECHNICAL ANALYSIS RATE: WEEKLY GRAPHIC (July 2008 to May 2021) (GRAPHIC 1)

The weekly GBP / AUD rate chart still shows how the pair is currently grappling with two longer term technical structures. From a certain point of view, GBP / AUD rates were pushed back to the downtrend line of the 2008 and 2015 highs, a trend line it had already crossed for a few weeks in 2020 before dropping down. The other perspective is that GBP / AUD rates sit in the middle of a symmetrical triangle formed with resistance measured from the 2015 and 2020 highs and support measured from the 2013 and 2016 lows.

GBP/EUR TECHNICAL ANALYSIS RATE: DAILY GRAPHIC (January 2020 to May 2021) (GRAPHIC 2)

Sterling technical analysis: GBP / AUD, GBP / CAD, GBP / NZD rate

GBP / AUD rates marked a series of “higher highs and higher lows” in January, February, April, May and now June. However, all is not optimistic. The pair is struggling to maintain its daily 21-EMA as support while testing the 23.6% Fibonacci retracement of the 2020/2021 high range at 1.8227. The change in momentum comes as the pair had just found rejection at the parallel channel resistance dating back to June 2020. A deeper pullback could develop before GBP / AUD rates finally reach their bullish technical potential at long term.

GBP/GOUJAT TECHNICAL ANALYSIS RATE: DAILY GRAPHIC (February 2020 to May 2021) (GRAPHIC 3)

Sterling technical analysis: GBP / AUD, GBP / CAD, GBP / NZD rate

More range trading has defined the GBP / CAD price action in recent weeks. The pair continues to track the 38.2% Fibonacci retracement (1.7121) as well as the ascending trendline from the August 2019 and December 2020 lows for several weeks. The dynamics are fairly neutral. GBP / CAD rates are tangled in their daily EMA envelope, which is neither in bearish nor bullish sequential order. Daily Slow Stochastics retreat before reaching overbought territory, while Daily MACD continues to rise towards its signal line while in bearish territory. More clarity is needed before determining a directional bias.

GBP/NZD TECHNICAL ANALYSIS RATE: DAILY GRAPHIC (January 2020 to May 2021) (GRAPHIC 4)

Sterling technical analysis: GBP / AUD, GBP / CAD, GBP / NZD rate

GBP / NZD rates continue to wrap around the top of the symmetrical 10-month triangle while playing ping-pong Fibonacci retracements at 23.6% (1.9287) and 38.2% (1.9760) of the 2020/2021 high range, while following the ascending trendline from the October 2008 and August 2015 lows. Directional bias is lacking, as is momentum: the EMA envelope is not neither in a bearish nor a bullish sequential order; the daily MACD is flat, just above its signal line; and the daily slow stochastics are flat, just above their midline.

— Written by Christopher Vecchio, CFA, Senior Currency Strategist

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