GBP/AUD Turns Bearish Amid Forecast of Decreasing Manufacturing Production in the UK

Australia – Cash Rate

On Tuesday, at GMT 4:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate. It is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies. So, binary options traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting. The forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

United Kingdom – Manufacturing Production

On Friday, at GMT 8:30 a.m., the UK’s Office of Labor Statistics will release the United Kingdom’s manufacturing production figure. It measures the total inflation-adjusted value of output produced by manufacturers in the country.

Businesses are the first to react to changing economic climate and the manufacturing production makes up around 80% of the total industrial production in the United Kingdom. Hence, binary options investors consider this data to be a leading indicator of the overall economic health of the country.

Last month, the UK’s manufacturing production increased by 0.4%. Analysts are estimating that this month it would increase by 0.3%.

GBP/AUD Forecast

Since breaking above the downtrend line on June 12, the GBP/AUD remained range bound. Over the last two months, it mostly traded between 1.7600 and 1.7990 levels. However, on August 2, the GBP/AUD formed a large bearish outside bar and the pair broke below the support near 1.7600. Currently, it is trading just below the support near 1.7600.

There is a good possibility that the Reserve Bank of Australia will leave the overnight cash rate unchanged at 1.5%. On the other hand, analysts are expecting the UK’s manufacturing production to increase by 0.3%, slightly lower compared to 0.4% in the previous month.  We believe it would set a bearish fundamental outlook for the GBP/AUD this week. Therefore, if the GBP/AUD continue trade below the support near 1.7600, it would likely attract additional bearish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities below this major support level around 1.7600.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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