GBPAUD formed higher lows and higher highs to trade inside a rising channel on its daily time frame. Price is currently testing the resistance and could be due for a correction to support next.

The 100 SMA is crossing 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 or resistance is more likely to break than to hold. Applying the Fibonacci retracement tool shows the next potential support levels.

The 38.2% Fib lines up with the mid-channel area of interest at the 1.8500 handle while the 50% level is just above the dynamic support at the moving averages. A larger pullback could last until the 61.8% Fib closer to 1.8150 or even until the channel bottom at 1.8000.

RSI is turning lower from the overbought zone to signal a return in selling pressure while stochastic is also starting to make its way down, so price might follow suit. Once both oscillators hit the oversold regions and turn back up, price could rebound as well.

Sterling continues to wait on Brexit updates to gauge direction, and so far it looks like markets are bullish on the idea that the UK could be able to move the deadline by a few more weeks. This could buy the government enough time to broker a better deal and avoid a ‘no deal’ scenario that was seen to be most bearish for the pound.

Meanwhile, the Aussie is on weak footing as traders have yet to see positive updates on US-China trade talks. Medium-tier economic data from Australia itself has been sub par as both manufacturing and services PMIs printed declines.