Oil prices are rising near 7-year highs
October 12, 2021
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Oil prices rose during the trading session today in the European market, in the fourth…
GBP/AUD Bullish Pressure Likely to Fade Amid Increasing Public Sector Borrowing in the United Kingdom
United Kingdom – Public Sector Net Borrowing
On Tuesday, at GMT 7:00 a.m., the UK’s Office for National Statistics released the public sector borrowing figure. It measures the difference in the value of the spending and income of the public corporations as well as the central government of the UK and other local governments during the last month.
A positive public sector borrowing figure would indicate a budget deficit and a negative figure would indicate a budget surplus. Hence, a negative figure is usually taken as good news for the British Pound.
Last month, the UK public sector borrowing figure came out at 20.0 billion. The forecast for this month was that it would come out at 26.3 billion. However, the actual figure came out much worse, at 30.8 billion.
Australia – Private Sector Credit
On Wednesday, at GMT 12:30 a.m., the Reserve Bank of Australia released the month-over-month Private Sector Credit data. It measures the changes in the total value of new credit issued to consumers and corporations in the country over the previous month.
Forex traders consider the private sector credit to be an important fundamental indicator of the Australian economy. Because borrowing and spending have a high correlation. Consumers and businesses only take out credit when they feel confident about their ability to pay it back in the future. Hence, it also acts as a measure of consumer and business confidence.
Last month, the private sector credit in Australia did not change and remained at 0.0%. The forecast for this month was set at an increase of 0.1%. The actual figure matched the expectation and came out at 0.1%.
GBP/AUD Forecast
The GBP/AUD remained in a strong downtrend since October 22, 2020. Over the last two months, it has gone down by around 1,100 pips. On December 11, it fell to the 1.7425 level and found strong support. Over the last two weeks, the GBP/AUD started a bullish move and found resistance near 1.7880. Currently, it is trading just below the resistance near the 1.7880 level.
The Australian Private Sector Credit increased as expected, by a thin margin of 0.1%. On the other hand, the UK’s Public Sector Net Borrowing went up much higher than expected to 30.8 billion. We believe it would set a bearish fundamental outlook for the GBP/AUD this week. Therefore, if the GBP/AUD remains below the resistance near 1.7880, it would likely attract additional bearish momentum in the market.
Hence, CFD traders should look out for trading opportunities below this major resistance level around 1.7880.
Market Analyst / Trading Consultant . 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 about various tech and financial topics. You can reach him at contact@asifimtiaz.com
