- GBP/AUD looks notch up a monthly gain

- GBP firming up again

- AUD/USD could offer major signal for GBP/AUD

- "Huge head and shoulders" pattern noted on AUD/USD

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GBP/AUD rate at publication: 1.8000Bank transfer rates (indicative guide): 1.7370-1.7500Money transfer specialist rates (indicative): 1.7550-1.7800More information on securing specialist rates, hereSet up an exchange rate alert, hereThe British Pound is attempting to push higher against the Australian Dollar once again at the start of a new week and ahead of quarter- and month-end, as the UK currency finds itself in the driver's seat but the Aussie Dollar looks decidedly more mixed and uncertain.

A rise in Sterling against the majority of the world's largest currencies at the start of the new week suggests some idiosyncratic demand for the Pound, which is in turn feeding into a stronger Pound-to-Australian Dollar exchange rate (GBP/AUD).

GBP/AUD has lifted a quarter of a percent to trade at 1.8077 and those watching this pair will be eyeing a target at the month and 2021 best at 1.8147, a break of which would open the door to fresh 5-month highs.

"Sterling has benefited from the UK’s strong vaccination rollout relative to its peers this year, boosting recovery hopes and demand for UK assets," says George Vessey, a foreign exchange strategist with Western Union Business Solutions.

For the Australian Dollar, commodity price trends and broader investor sentiment will be an important decider on where the currency is headed over coming days and weeks.

Providing some support to the currency has been an improvement in iron ore prices which have rebounded over the course of the past week, thanks in part to easing concerns over further curbs on steel output in China.

While iron ore prices have recovered, concerns still nevertheless remains that the top might be in for Australia's main export and foreign exchange earner.

"Further capacity reduction still remains under consideration in China. Many regard the policy as a way to reduce steel production, but we think it represents a critical policy shift from quantity to quality control. We still expect steel output to rise slightly in 2021. With demand for steel moderating, the risks of over-supply are rising," says Brian Martin, an economist at ANZ Bank.

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Over the longer-term, ANZ say China’s intention to consolidate the steel industry capacity and to increase self-dependency for iron ore will pose downside risks to its imports.

Should iron prices fail to regain upside traction the door to further GBP/AUD gains is opened.

The course of GBP/AUD over coming days and weeks could however also depend on how the larger and more decisive Australian Dollar-U.S. Dollar exchange rate (AUD/USD) evolves; the rule of thumb being that any further declines in AUD/USD will on balance aid GBP/AUD upside.

Matthew Weller, Global Head of Market Research at FOREX.com says "a huge head-and-shoulders" pattern is forming in AUD/USD and it is now "something every FX trader is watching".

"The US dollar has been on tear over the last month, reversing its trend of relative weakness over the previous three quarters," says Weller. "The recent moves have flipped the technical bias in favour of the greenback against most of her major rivals, but arguably the most compelling technical setup is in AUD/USD, which has carved out a huge head-and-shoulders pattern over the last three months."

Weller explains this classic pattern shows a shift from an uptrend (higher highs and higher lows) to a downtrend (lower lows and lower highs) and often marks a significant top in the chart.

He says the pattern is typically confirmed by a break below the “neckline”; in this case, the neckline can be represented either by the ascending trend line near 0.7650 (already broken) or the horizontal support level at 0.7560 (still intact).

As the chart below shows, the 100-day EMA also comes in near 0.7600, providing another reason to monitor the 0.7560-0.7600 zone as a significant long-term area:

Source: StoneX, TradingView

"For traders looking to short AUD/USD, one potential strategy would be to wait for rates to confirm the break below 0.7560 to enter a trade with a stop above 0.7600 or 0.7650 with targets at either the 200-day EMA near 0.7400 or even the head-and-shoulders pattern’s “measured move” objective in the lower 0.7000s," says Weller.

"Meanwhile, if AUD/USD is able to hold support and rally above 0.7700, it would erase the near-term bearish bias," he adds.

Those watching GBP/AUD should therefore also be keeping one eye on AUD/USD as a major deterioration here would open the door to some meaningful upside in GBP/AUD.

However, any failure to go lower in AUD/USD would likely contribute to further choppy, sideways-orientated range in GBP/AUD, even in the event of broader Sterling strength.