Pound Sterling Live’s technical pound to Australian dollar forecast at the start of February 2016.

The GBP/AUD exchange rate has renewed its down-trend that is dictated by a descending channel. This descending channel does however lie in the midst of a longer-term up-trend.

It is now close to a support low at 2.0180, where it could base and find support.

After that there is even more support at around the 2.0000 level as well as round-number psychological support.

Although the short-term trend is down and normally expected to extend further, the triple convergence between MACD and price is a bullish indication and warns of a potential resumption of upside.

Indeed, the convergence with OBV is a further sign indicating underlying strength and a possible reversal on the horizon.

Furthermore, the price action seems to be churning slowly and the old saying “never short a dull market” may on this occasion be true.

However, neither are there any signs of strength yet, but a move above 2.0325 would go some way to signalling the start of a reversal and rebound, with an initial target at 2.0532, as ultimately this market may be in transmission.

At the time of writing the GBP to AUD is at 2.0313 and about to test our call on the prospect for a move higher should 2.0325 be broken.

Australian Dollar Softer on RBA, Chinese Data

"We continue to believe that softer demand conditions later in the year will prompt the Bank to provide some further monetary stimulus. The Bank is clearly cognisant of the emerging risks and ready to act if need be. We expect that later in the year, ongoing low inflation and a softening conditions, especially in the labour intensive housing sector, are likely to push the RBA over the line," says Felicity Emmett at ANZ.

The new month saw the Australian dollar pare back some of its recent gains.

Chinese Manufacturing PMI numbers came in below expectations at 49.4 ensuring the commodity dollar complex is slightly softer, particularly against the British pound.

Note that the FTSE 100 has moved higher; the GBP appears to respond positively to gains in the UK's stock index and we are seeing the GBP to AUD rate higher by 0.3% as a result.

Meanwhile, Australia-wide capital city dwelling prices gained ground in January, following a flat result in December. Capital city dwelling prices rose 0.9% in January. Prices rose 7.4% in the year to January.

This was the softest annual rate since March 2015 and well down on the recent peak in annual growth of 11.5% in the year to April 2014 which is an AUD-negative. The RBA is keen to see its measures to calm the housing market take effect - as appears to be the case.

There is therefore increasing scope for the central bank to cut interest rates to help bouy the economy if need be over the course of coming months.