A shooting star reversal and improving risk tone put GBP/AUD downside firmly on the radar.
* Aussie tracking risk assets more closely than pound
* Australia's first full monthly CPI report due
* UK budget expected to freeze tax thresholds and raise levies
* Shooting star reversal reinforces bearish bias below 2.0300
Summary
Risk appetite looks set to drive GBP/AUD this week, with correlations showing the Aussie tracking broader market sentiment far more closely than the pound. While medium-term focus leans on global risk trends, near-term volatility could come from Australia's first full monthly inflation report and the UK budget update. On the charts, Friday's shooting star reversal below 2.0300 keeps downside risks in play.
Risk Appetite in Focus
Source: TradingView
With risk appetite improving as the new week begins, the high-beta Aussie may benefit more than the lower-beta pound, reinforcing confidence in the bearish price signal. That's evident in the rolling 10-day correlation scores between GBP/AUD and a range of risk assets, along with short and longer-dated yield differentials between the U.K. and Australia shown below.
AUD's correlations of -0.75, -0.82 and 0.75 with bitcoin, Nasdaq and VIX futures over the past fortnight point to a strengthening link with broader risk appetite, suggesting that may be the key driver this week rather than individual events affecting borrowing costs in both nations. Over the same period, GBP/AUD has shown only a loose correlation with 10-year yield differentials and no meaningful relationship with two-year spreads, which are typically shaped by monetary policy expectations from the Bank of England and Reserve Bank of Australia.
AU CPI, U.K. Budget Headline Event Risk
Still, while risk appetite looks more influential than event risk over the medium term, there's plenty on the calendar this week that could spark short-term volatility for the pair.
Source: TradingView
In Australia, traders will get October inflation data, the first full monthly report in the new series. That raises the risk of data volatility, making it a key event for GBP/AUD. Movements in the trimmed mean reading, the RBA's preferred underlying measure, will be critical, along with services prices given ongoing debate among officials about spare capacity in the economy.
In the U.K., attention turns to the budget speech from Chancellor Rachel Reeves. It's expected to freeze income tax thresholds, cut savings limits, raise dividend taxes and cap pension perks. Likely measures include a council tax surcharge on expensive homes, an EV road levy and higher gambling duties, with possible tweaks to inheritance and capital gains rules. Increases to income tax, VAT and National Insurance have been ruled out. Government borrowing needs mean gilt sales will rise to their highest level since 2021.
GBP/AUD Prints Reversal Signal
Source: TradingView
Looking at GBP/AUD on the charts, Friday delivered a clear shooting star candle, a bearish reversal signal warning of downside risk. Coming from above 2.0300 resistance where multiple failures have occurred over the past month, it strengthens conviction in the signal.
If price stays capped beneath 2.0300, shorts could be considered below the level with a stop above for protection, initially targeting the November 13 uptrend near 2.0180. A break of that level would put 2.0150, where buying emerged last week, on the radar along with support at the psychologically important 2.0000 mark.
For now, momentum indicators offer a neutral directional bias. RSI (14) is trending higher and sits just above the neutral 50 level. MACD remains in negative territory but has crossed the signal line from below, suggesting diminishing downside pressure. Taken together, the message favors price signals over holding a fixed bias.