GBPAUD could be in for a bounce off the top of its ascending trend channel as price tests the resistance near the 1.7900 major psychological mark.

If this holds as a ceiling, the pair could retreat to the channel bottom around the 1.7700 major psychological mark or at least until the mid-channel area of interest at 1.7800 that’s close to the 100 SMA dynamic inflection point.

However, the 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside or that the ceiling is more likely to break than to hold. In that case, a sharper climb could ensue.

Stochastic is already indicating overbought conditions or exhaustion among sellers, and turning lower could mean a return in bearish momentum so price could follow suit. RSI has a bit more room to climb before reflecting overbought conditions, so buyers could still have some energy for a break higher.

Sterling has been on weak footing in the past week as Brexit talks are falling through, but risk-off flows appear to be weighing on the higher-yielding Aussie more these days. Data from Australia has been somewhat strong, though, as the flash PMI readings for September have reflected a faster pace of expansion.

Upbeat remarks from BOE head Bailey on how the UK economy has been growing at a better than expected rate in Q3 is also lifting the pound. The upcoming meeting between the UK and the EU next week also appears to be bringing in some optimism that a compromise could be reached, which could be bullish for sterling.

If talks still break down, the UK currency could see more downside as the prospect of losing trade agreements could hamper growth further on top of pandemic-related restrictions.