GBP/AUD Likely to Test Key Support as UK’s Manufacturing PMI Set to Drop

GBPAUD – Technical Analysis for Australian binary options

Australia – Cash Rate

On Tuesday, at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, binary options investors pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

United Kingdom – Manufacturing PMI

On Tuesday, at GMT 8:30 a.m., the Markit released the United Kingdom’s manufacturing purchasing managers’ index (PMI) figure. It measures the level of a diffusion index by surveying around 600 purchasing managers in the country.

Businesses are the first to react to changing economic climate. The PMI is calculated based on survey questions covering employment, production, price levels, new order situations as well as inventory conditions. Hence, binary options traders consider this data to be a leading indicator of the overall economic health of the country.

Last month, the UK’s manufacturing PMI came out at 55.2. The forecast for this month is set at 54.8.

GBP/AUD Forecast

GBPAUD Analysis for Australian binary options - 2nd April 2018Since January 11, 2018, the GBP/AUD remained highly bullish. Over the last three months, the pair climbed up by around 1,400 pips. However, after reaching near the 1.8500 on March 28, it found a strong resistance and formed a bearish pin bar. Over last week, the GBP/AUD turned bearish, but soon found support near 1.8180.

The Reserve bank of Australia might leave the cash rate unchanged at 1.5% for the time being. On the other hand, analysts are expecting the UK’s manufacturing PMI reading is to come down from 55.2 to 54.8. We believe it would set a bearish fundamental outlook for the GBP/AUD this week. Therefore, if the GBP/AUD closes below the support near 1.8180, it would likely attract additional bearish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities below this major support level around 1.8180.

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