GBP/AUD Tests Long-Term Downtrend Line As Amid Improving Inflation in the UK

Australia – Westpac Consumer Sentiment

On Tuesday, at GMT 11:23 p.m., the Westpac Banking Corporation in Australia released its consumer sentiment index. It measures the changes in the level of a diffusion index by surveying 1,200 consumers in the country.

Binary options investors consider the consumer sentiment to be one of the leading indicators of future consumer spending. Because it makes up a large portion of the Australian GDP. Hence, the large sample size of the Westpac consumer sentiment survey makes it one of the best leading indicators of the overall Australian economy.

Last month, the Westpac consumer sentiment index reading came out suggesting a 4.1% increase. This month, it decreased by 4.5%.

United Kingdom – Consumer Price Index

On Wednesday, at GMT 7:00 a.m., the UK’s Office for National Statistics released the year-over-year Consumer Price Index (CPI). It measures the changes in the price of goods and services acquired by consumers. 

The CPI basically measures the inflation level in the economy. This data is considered binary options traders as one of the most important leading indicators of the overall economic health.

Last month, the UK’s CPI (y/y) increased by 0.3%. Analysts were expecting that for this month, it will grow at a faster pace, at 0.5% growth. The actual result came out much better than expected, at 0.6% increase.

GBP/AUD Forecast

GBPAUD Jan 20 2021

The GBP/AUD formed a bearish pin bar on the weekly timeframe in March 2020. Over the last three quarters, the pair fell by around 3400 pips. Earlier today, the GBP/AUD tested the downtrend line but found resistance near the 1.7750 level. Meanwhile, the RSI indicator has broken above the downtrend line on the daily timeframe, indicating further bullishness in the coming days. Currently, it is trading just below this confluence zone created by the downtrend line and the horizontal resistance level. 

The Australian Westpac Consumer Sentiment fell by -4.5%. On the other hand, the  Consumer Price Index in the United Kingdom increased by more than expected, registering an increase of 0.6%. We believe it would set a bullish fundamental outlook for the GBP/AUD this week. Therefore, if the GBP/AUD closes above the resistance near 1.7750, it would likely attract additional bullish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities above this major resistance level around 1.77500.

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