AUD to GBP jumps to 21-month highs as the sell-off in British pound continues amid the rising no-deal Brexit and weaker than expected economic data.
UK GDP Growth Below Forecasts in July
The United Kingdom Gross Domestic Product (GDP) came in at 6.6% in July below the expectations of 6.7%. The UK economy contracted by 20% in the second quarter marking the worst performance in the G7 Group for the second quarter. The UK economy remains 12% smaller than its pre-coronavirus level in February.
The UK Manufacturing Production registered in at 6.3%, beating the expectations of 5% in July, while the Total Trade Balance dipped from previous £5.3B to £-8.635B in July.
Brexit Talk Tensions Weigh On GBP
Meanwhile, the rising tensions in Brexit talks also weigh on the British pound, after the UK Parliament introduced the Internal Markets Bill. The European Commission President said that Internal Markets Bill breaks the international law and would undermine trust between the two sides. Today EU threatens with legal action against the UK if the UK not provide reassurance that the UK will not break the Brexit withdrawal agreement as I wrote in the FTSE analysis yesterday: FTSE 100 Under Pressure As EU Might Trigger Legal Action Against UK.
UK Strikes First Trade Deal After Brexit
Britain strikes the first trade deal after the Brexit with Japan as the negotiations with the EU has stalled. The trade agreement concluded in just three months, and now the UK exports would be tariff-free, boosting the trade between the two countries.
AUD to GBP Analysis
AUDGBP continues higher for the sixth straight session adding today 0.38% at 0.5688 hitting the highest level since December 14, 2018. The upward momentum gained strength after the pair breached above the 50-day moving average the previous week. A threat for bulls is that the pair has entered the overbought area.
Intraday resistance is at 0.5716 the daily high. Next level to watch is 0.5738 the high from December 13, 2018. December 2018 at 0.5808 is the next hurdle for AUDGBP.
On the other hand, support for the pair stands at 0.5664 today’s low. More bids would emerge at 0.5580 the low from September 10. A break for AUD to GBP below the 50-day moving average at 0.5520 would invalidate the bullish momentum.
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AUD to GBP Daily Chart
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