GBPAUD was trading 0.70% lower on Tuesday as risk assets rallied across the board on U.S. election talk. President Trump has instructed the GSA to work alongside Democrats on the transition to a new leader, but he insisted this does not affect his legal efforts.
The market saw it as a step towards a more seamless transition and this led to a weakened U.S. dollar due to stimulus expectations. The potential for a sizable stimulus package rose as Joe Biden confirmed he would choose former Federal Reserve Chair Janet Yellen as the Treasury Secretary. Yellen’s dovishness at the helm of the central bank has traders expecting more of the same.
Australia’s Deputy Governor Guy Debelle told business economists in a speech that the bank’s path to stimulus had helped to lower the Aussie currency and boost consumers and employment. This implied the bank are happy with this path but further stimulus would be further down the line and may not be needed with a vaccine. Brexit talks are ongoing and this is the threat to further Australian dollar strength. A deal is said to be close and sterling would likely see a bounce on the news.
GBPAUD Technical Outlook
GBPAUD has failed a test of the levels near 1.8240-8300 and a bearish close here could see the pair move to target the 1.8000 level in the days ahead. There are a few support levels on the way down to 1.7570. A bearish trade could be placed with a stop above today’s high. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
GBPAUD Daily Chart