GBPAUD was in a strong uptrend over the past few years, but it appears that the fifth wave of the larger bullish impulse completed in 2025. After every completed five-wave cycle, the market usually enters a corrective or reversal phase, so the current bearish turn is not surprising. The break below the base channel support line further confirms that a larger trend reversal may already be underway.
Following the sharp decline, we believe the pair is currently trading within wave 3 of a new five-wave bearish cycle, which suggests that more downside can follow in the bigger picture. However, in the near term, price may soon complete subwave “v” of wave 3 around the 1.85–1.82 support area. This opens the door for a higher-degree wave 4 corrective rebound that could lift the pair back toward the 1.93–1.94 resistance zone before the broader bearish trend resumes in wave 5 toward 1.82 and potentially lower.
Fundamentally, the latest RBA minutes suggest the central bank may be leaning toward a pause after three rate hikes this year, as policymakers appear willing to wait for additional economic data and monitor how the US-Iran situation develops. At the same time, equity markets are starting to pull back, which could temporarily support crosses such as GBPAUD and EURAUD.
Technically, GBPAUD already shows a clear five-wave decline within an extended third wave, which supports the idea of a corrective wave four recovery in the weeks ahead. In addition, relatively hawkish tones from both the ECB and BOE could provide extra support for these European currency crosses against the Australian dollar.
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