GBPAUD Downtrend Likely to Continue Amid Positive Inflation Forecast in Australia

GBPAUD  Forecast & Technical Analysis – Binary Options

Australia – Consumer Price Index

On Wednesday, at GMT 1:30 a.m., the Australian Bureau of Statistics will release the quarter-over-quarter consumer price index (CPI) figure. It measures the changes in the price of goods and services bought by Australian consumers in the last quarter.

The consumer price index is primarily used by the Australian central bank to measure inflation. Any significant change in the CPI often makes the Forex market extremely volatile. Also, inflation at the retail level has a big influence on the central bank’s future monetary policy. Hence, it is considered by binary options traders to be a leading indicator of the Australian economy.

Last quarter, the Australian consumer price index decreased by 0.7%. The forecast for this quarter is set at an increase of 0.2%.

United Kingdom – Net Lending to Individuals

On Friday, at GMT 8:30 a.m., the Bank of England will release the month-over-month net lending to individuals figure. It measures the changes in the total value of new credit issued to consumers in the past month.

Consumer spending is highly correlated with consumer credit.  The net lending to individuals figure can indicate future consumer spending as well as consumer confidence in the economy. This is because people only take on debt when they feel financially secure about future incomes. Therefore, binary options investors consider it to be an important indicator of economic activity in the United Kingdom.

Last month, the last net lending to individuals figure came out at 5.2 billion. The forecast for today is set at 4.2 billion.

Trading GBPAUD – Analysis

GBPAUD Forecast - April 28 2020

Since forming an inside bar on April 3, 2020, the GBPAUD remained in a strong downtrend. Over the last few weeks, it fell by around 1,300 pips. Earlier last week, it fell below the support near 1.9510 level. Today, it once again broke another support level located near the 1.9300 level. The next support is located at 1.9150 level and the GBPAUD just might fall further to test it.

The Australian Consumer Price Index will likely grow at much slower pace over the last month, at 0.2%. On the other hand, analysts are expecting the UK’s Net Lending to Individuals to go down to 4.2 billion. But, the positive CPI in Australia would have a higher impact on the GBP/AUD valuation. 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 1.9300, 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 1.9300.

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John Walker

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