NEW OPENING LONG POSITION TAKEN IN GBPAUD @ 1.4900 – TARGET 1.53

Below is a chart of the once mighty pound against the seemingly all conquering Australian dollar. We can see a material 10% depreciation over the last 3 months with the last week in particular displaying renewed strength to the downside.

The all time low against the so called “Aussie” is just over 1.46 and we think that at this level, given (a) the detachment from PPP (deemed to be around $2.10 – $2.20) and the level of oversold-edness of the pair as evidenced by the RSI (highlighted in red), that a sharp rebound is due. It is also worth watching this pair as a proxy for the wider stock market as this tends to have an inverse correlation with equities, ie when the stock market falls the pair rises and vice versa.