GBPAUD Rally Could Stall at 1.7800 With New Lockdown
The GBPAUD pair bounced last week after a vote of no confidence was tabled against Victorian Premier Daniel Andrews and his handling of the Coronavirus. News today is that the U.K. is heading for further lockdown restrictions and this could halt the recent rally in the Pound.
Criticism has focused on the extended lockdown and the desire to create extraordinary new laws which would allow citizens to arrest others suspected of spreading the virus. A group of 14 retired judges wrote a letter slamming the plan as ‘unprecedented, excessive and open to abuse’ and asked parliament to vote it down. Political instability is not helping the Aussie currency at this time but the new measures in the U.K. won’t help the Pound.
The U.K. is moving to close hospitality venues by 10pm and encouraged a return to home working. The measures are expected to be announced by Boris Johnson tonight. There is also talk of a “winter lockdown” being enforced, which would involve a mini lockdown in October. Extended measures and restrictions will not help the Pound’s economic outlook and with Brexit still hanging over Sterling, this is not an ideal time to be long.
Last week saw the Bank of England meeting minutes, which showed the bank had already discussed and prepared for negative interest rates and a mini lockdown could speed that process up with interest rates dropping below zero by year-end.
GBPAUD Technical Outlook
GBPAUD bounced at the 1.7550 support and closed above the previous support at 1.7700 but the price may be running out of steam with a double top on the daily chart at 1.7800. A move back to test the support is posssible if this pattern caps the price. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.