GBPAUD is trending higher on its short-term charts, as the pair formed higher lows connected by a rising trend line. Another test of support seems to be taking place.

Price is retreating to the 50% Fib that lines up with the trend line around the 1.9085 mark. A larger correction could reach the 61.8% Fib at the 1.9050 minor psychological mark and 100 SMA dynamic support, which might be the line in the sand for a bullish pullback.

The 100 SMA is above the 200 SMA to indicate that the path of least resistance is to the upside or that support is more likely to hold than to break. In that case, GBPAUD could resume the rally to the swing high at 1.9236 or higher.

However, stochastic is still on the move down to show that bearish pressure is in play or that the correction could keep going until oversold conditions are met. RSI has plenty of ground to cover before indicating exhaustion among sellers.

Earlier this week, Australia printed weaker than expected CPI data that’s weighing on hopes that the RBA could hike again in their policy statement next week. This might be enough to keep a lid on AUD rallies, along with weaker risk appetite stemming from mostly downbeat data from the Chinese economy.

China has its flash PMI readings for June lined up on Friday, so these might still impact overall market sentiment and AUD price action.

Mixed results are eyed, but stronger than expected data could be enough to spur gains for riskier currencies. Downbeat figures might still keep AUD supported if traders ramp up PBOC stimulus expectations then.

Meanwhile, the pound remains supported by BOE tightening hopes, as the UK economy reported strong inflation data while seeing green shoots in spending and overall growth.