GBPAUD was lower for a second day after mixed data from the U.K. economy. The pound was supported by stronger than expected retail sales, but PMI data later in the morning was softer, which suggests a weaker Q4 GDP.
Retail sales have risen for a fifth-straight month in the U.K. and analysts expected a gain of 3.7% from this number, but the actual number was 4.7%. The pound didn’t move much as traders awaited the PMI data, where the key takeaway was the all-important services PMI, which was weaker than expected.
U.K. manufacturing PMI came in slightly higher at 53.3 versus 53.1, but the services number showed a reading of 52.3 versus the expected 54. The number is still in expansion territory over 50, but the Chief business economist at IHS Markit which delivers the PMI remarked that the growth rate in the economy, ‘looks to have slowed sharply and the risk of a renewed downturn has risen’.
The PMI number could’ve been worse if it wasn’t for higher exports to companies seeking to stock up ahead of potential Brexit supply disruptions. Talks over the U.K.’s exit from the bloc have restarted with both sides running out of time to strike a deal. This will play on in the background over the next weeks.
GBPAUD Technical Outlook
The Aussie gained for a second day and now targets the 50-day moving average at 1.8100. This would be a gain of almost 200 pips and if the bears got through there then 1.7700 is possible, which was support in mid-September. Place a stop above today’s open if we see a bearish close.
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GBPAUD Daily Chart
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