The UK economy has come under pressure yet again and the Government is also in the firing line over their current Brexit plans, which now seems like a measure to move it further along, rather than come to any sort of actual agreement due to a fractured Tory party. Hard Brexit supports and Soft Brexit supports are currently arguing over the problems that leaving the EU causes, at the same time with the deadline fast approaching and the customs union looking like an expensive proposition things have not really moved along. Instead the back-stop approach has come into play which will see the UK government extend its ability to be in the customs union until 2021 by abiding by all laws and tariffs the EU may impose. This in theory would also prevent it from having its own trade agreements as well, and cause further uncertainty for businesses in the long run trying to figure out the best strategy.
Looking at the GBPUSD, it has been a case of the bulls giving up and stepping back out of the picture, even with weaker US consumer credit. After a strong start to the day after the labour party mandate and closing above the 1.3389 support level the GBP has stopped short of crossing back below it as struggles to find momentum and is looking ever more bearish. A retest of 1.3389 is very much likely and a breakthrough here could send the GBPUSD tumbling to 1.3241. In the off chance that the markets finally agree with the UK government position (an impossible one) then we could see the bulls push up to resistance at 1.3518 and 1.3612 in the long run. However, the bulls seem fairly unlikely given the recent information and predicament that the UK finds itself in when negotiating with the EU.
The Australian dollar has come under some serious pressure and it looks like the bears are back to take another swipe. Recent economic data had been positive but Trade Balance data out last night showed a drop to 0.98B (1B exp), this has not helped the good fortunes at all for the AUD as the technical traders have also jumped into add to the pressure in what looks like a very strong set up.
The AUDUSD has hit a major level of resistance while coupling this with a bearish trend line as can be seen above. It clearly shows that the bulls and bears are respecting this level and enabling the AUDUSD to shift lower now. Support levels at 0.7588 and 0.7527 are looking like they will be a key target for bearish traders in the coming days if this continues. On the flip side if the AUD can break through the trend line then I would expect first a retest from a support point of view and then a jump to the next level of resistance at 0.7751.