GBPAUD has formed higher highs and higher lows inside a rising wedge pattern visible on the 4-hour time frame. Price has been testing the top of the wedge for some time now, possibly gearing up for a bullish breakout.

If that happens, the pair could climb by the same height as the chart formation, which spans around 600 pips. The 100 SMA is above the 200 SMA to confirm that the path of least resistance is to the upside or that resistance is more likely to break than to hold.

RSI is pointing up to suggest that there is some bullish pressure left enough to spur a break past the 1.9000 major psychological mark.

However, stochastic is turning lower to suggest that selling pressure could pick up from here, possibly leading to another dip to support levels. The bottom of the wedge lines up with the 100 SMA dynamic support and the 1.8800 major psychological mark, so buyers might be keen to defend that area.

The upcoming UK CPI release would likely determine whether or not the wedge ceiling is likely to hold. Analysts expect to see another tick higher in headline inflation, from 5.1% to 5.2%, which would be a new record high. This is also more than twice the BOE’s target level, so the central bank is under a lot of pressure to act.

A stronger than expected figure could confirm that the BOE is likely to hike interest rates and reduce asset purchases soon in order to keep price pressures in check. A weak read, on the other hand, could dash hopes of a BOE hike happening sooner rather than later.

Australia has its jobs report coming up later in the week, and a smaller 60K pickup in hiring is expected to follow the previous month’s impressive 366.1K jump.