British Pound Technical Analysis: GBP/AUD, GBP/CAD, GBP/NZD Rates Outlook

With May in the rearview mirror, it’s a good time to take stock of the British Pound’s performance against some of the more volatile major currencies, which were plagued by – you guessed it – volatile if not weaker commodity prices over the course of the month. While currencies linked to energy may be the exception to the rule, those with strong economic connections to agriculture and base metals faced tougher sledding (particularly the latter).

The net result was rangebound price action in GBP/CAD and GBP/NZD rates, which has been the modus operandi for quite some time. But decision time may be arriving for pairs like GBP/CAD and GBP/NZD as they funnel into the vertexes of their respective symmetrical triangles.

Meanwhile, GBP/AUD rates were able to generate more topside momentum through May although recently were rejected from a multi-decade trendline dating back to the all-time high in October 2008. This may be a temporary setback before another breakout attempt (like in 2020).

GBP/AUD RATE TECHNICAL ANALYSIS: WEEKLY CHART (JULY 2008 TO JUNE 2021) (CHART 1)

British Pound Technical Analysis: GBP/AUD, GBP/CAD, GBP/NZD Rates Outlook

To provide greater context to the prior comment, the weekly chart of GBP/AUD rates shows how the pair is currently contending with two longer-term technical structures. The first interpretation is that GBP/AUD rates were just rejected at the descending trendline from the 2008 and 2015 highs, a trendline that it previously breached for a few weeks in 2020 before turning lower. In true ‘false breakout’ fashion, the pair reversed all the way to consolidation support before resuming its march higher.

The second interpretation is that, even with a rejection from the descending trendline from the 2008 and 2015 highs, GBP/AUD rates are in the middle of a symmetrical triangle that’s formed with resistance measured from the 2015 and 2020 highs and support measured from the 2013 and 2016 lows.

Regardless of which interpretation is correct (or neither), the fact remains that bullish momentum is building in GBP/AUD rates unlike the other two GBP-crosses covered in this report. Weekly MACD is rising through its signal line, while weekly Slow Stochastics are holding in overbought territory. GBP/AUD rates appears to be on the precipice of a more significant trek higher. Is that time now? Perhaps not.

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