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Our free forex signals today is the GBPAUD instrument and we have the entry, stop and take profits levels to make the trade. Before we get to that, let’s look at the background for trading conditions for the pair.

The Aussie dollar is weakening as risk-off sentiment spreads, while the pound has found more bidders of late as the economy races ahead on the back of reopening, at least for now.

However, last week’s basking in the radiant warmth of record highs in the stock markets and continued dovishness from central bankers may only take us so far. Essentially then the global economy is not out of the woods yet and that means the global recovery is not necessarily on an onwards and upwards trajectory.

The European Central Bank policy decision to shift posture on inflation to a more relaxed one that would allow it to overshoot 2.0% as opposed to its previous “below, but close to, 2%” mantra adds more dovishness to the mix.

FOMC minutes shows tapering is getting closer

However, that was countered, perhaps, by the Fed suggesting that the day of asset-purchase tapering was drawing closer and in both central banks’ cases, worries over the lack of clarity over where inflation might be headed and the state of the recovery as judged by employment, is adding to the nerves.

The coup de grace for near-term risk-on sentiment – if that’s not too strong a phrase – has perhaps come from China, with its recent moves clamping down on Chinese companies listing in the US, which threatens to pull the rug from under the carpet of many top investment banks’ earnings, because of the loss of IPO fees it would entail, not to mention their actual investments in Chinese companies.

Also, forex traders remain aware that Covid is also very far from dead, with infection rates rising in Europe and Asia.

Aussie dollar exposed, nut economy still recovering strongly for now

With all that to contend with, and Australia’s own issues with a Covid resurgence and a return to lockdowns, the Australian dollar is particular bad place.

Having said that, the economic data is still pointing to a solid rebound, with the AiG manufacturing PMI up from May’s 61.8 to 63.2 in June.

Meanwhile the new UK Health Secretary, Sajid Javid, has confirmed the government is lifting Covid restriction on 19 July. That has helped to encourage forex traders to bet on the value of the pound rising further, but how long that rosey view will hold will depend on the infection, hospitalisation and death rate from Covid.

A downward revision in UK manufacturing PMI   to 63.4 for June doesn’t exactly accord with that buoyant mood.

But for now the outlook is positive for sterling, although, as in other advanced countries, supply bottlenecks and labour shortages are creating nervousness about inflationary pressures proving to be more structural than transitory.

Now let’s get to the free forex signals for today.

Before we do, you might be interested in getting into automated forex trading, if so read our comprehensive guide.

Free forex signals – Buy GBPAUD

Instrument: GBP/AUD

Order: BUY STOP

Entry price: 1.8500

Stop Loss: 1.8343

TP1: 1.8733

Recommended Risk: 1%
Risk / Reward Ratio: 1:1.5

Signal validity period: Good until cancelled

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