Diverging labour market conditions underpin a rally in GBPAUD

GBPAUD was rejected by a key support zone earlier this week, before being propelled higher by somewhat encouraging labour market data out of the UK and weak Australian employment figures. While the UK’s labour market data for August showed signs of weakness in wage growth, it was broadly positive, with the unemployment rate dropping to 7.7% from 7.8% and jobless claims declining more than expected. This was not the case in Australia, where the unemployment rate jumped to 5.8% from 5.7% and was underpinned by a loss of 10,800 jobs and a drop in the participation rate to its lowest level since 2007. (For a full review of Australia’s jobs data see: A one-two punch knocks AUDNZD down). If the UK remains on its path to an economic recovery and Australian economic data continues to disappoint, it may set the stage for more GBPAUD strength.

From a technical standpoint, GBPAUD’s rejection at a critical support zone around its 50day SMA and horizontal and trend line support show that the bulls may be in overall control of this pair for the moment. However, the pair may find some resistance around its 50% retracement level from its high on 30/08 and then its 21day SMA in the near-term, which are currently around 1.7155 and 1.7175 respectively. Beyond here we are watching for a break of 1.7215/20 – 61% retracement level from the pair’s high on 30/08 – to be the catalyst for a possible push back towards 1.7500 in the long-term.

Source: Forex.com

12.09.2013