GBPAUD has formed lower highs and higher lows to consolidate inside a symmetrical triangle pattern. Price is testing support and could be due for a bounce back to resistance from here.

However, the 100 SMA is still below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. This could send GBPAUD lower by at least the same height as the chart pattern or roughly 500 pips.

The gap between the indicators is also widening to reflect stronger selling pressure. Price is below the 100 SMA dynamic inflection point, so this could keep holding as dynamic resistance.

Stochastic appears to be turning higher, though, so there could be a chance for price to revisit the top of the triangle around 1.7800-1.7850 before turning back down. RSI is on middle ground and moving sideways to reflect consolidation.

Sterling is under downside pressure on account of new lockdown restrictions to curb the spread of a new strain of the coronavirus in the UK. At the same time, Brexit still poses uncertainties for businesses even as the government was able to strike an agreement with the EU. Recall that UK officials had to make concessions in the fisheries issue in order to avoid a no-deal Brexit.

There are no major reports due from the UK this week, although the speech by Governor Bailey might be worth watching. Any hints of further easing from the BOE might push the pound lower against its peers.

As for the Aussie, there are no major reports on Australia’s docket so market sentiment might be its main driving factor. Sustained risk appetite on the heels of US stimulus efforts could lift the commodity currency, along with progress in Australia’s fight against the pandemic.