GBPAUD Long

An extended downmove is likely to be broken at this high quality demand level. The pound, subject to recent shocks exacerbated by the Bank of Englands support for negative interest rates, can only continue its downmove until the market considers GBP undervalued. While it is true that the RBA are more comfortable in terms of monetary policy than the BoE, relations with China appear to be dwindling as Auastralia endeavour to uncover the true origins of Covid-19. The current strong AUS export data along with bullish iron ore prices may be an important opposing fundamental catalyst to consider. This idea coincides with an imminent risk-off outlook in equities, another supporting factor for a short-risk outlook as the technicals appear to be predictive of a sentiment shift.

While the current entry may be considered risky, one can wait for the break and retest of the downtrend if one so desires.