GBPAUD has formed higher lows and higher highs to create a rising channel on its 1-hour chart. Price is currently testing support and could be due for a bounce back to the top around 1.7900.

The 100 SMA is below the 200 SMA to suggest that sellers might still have the upper hand, but the gap between the indicators has narrowed significantly. This reflects slowing bearish pressure and a likely bullish crossover which would encourage more buyers to return. In addition, the moving averages line up with the channel bottom to add to its strength as support.

Stochastic is already treading higher to signal a return in bullish pressure while RSI is moving sideways to reflect consolidation. A break below the channel bottom at 1.7700 could mean a reversal from the short-term climb.

Sterling has been under a lot of downside pressure on account of the setbacks in Brexit talks, which might wind up putting the UK economy in a much deeper slump. Keep in mind that the pandemic and resulting restrictions already hit the economy hard, and the prospect of losing trade advantages could bring more declines.

Meanwhile, the Aussie has managed to score some wins even if data from the Australian economy has been mixed. The commodity currency could continue to take cues from market sentiment, although it has been able to score some gains from rising gold prices.

There are no major reports due from both Australia and the UK this week, but the pound might be on weaker footing on account of negative rate talk coming after the BOE decision last week. More dovish remarks from BOE Governor Bailey in his speeches this week could put the currency under more downside pressure as traders price in the possibility of more easing.