The Pound to Australian Dollar exchange rate (GBP/AUD) continues to show a negative bias at the start of the new trading week.

The pair is quoted at 1.6789 and is trapped in a downtrend that has been in place since early May. It was on May 10 that the exchange rate reached a 2017 high at 1.7652 and subsequently reversed.

Momentum alone suggests the easiest route forward from here is lower.

The pair has now fallen to a tough support zone in the 1.67s, made up of the 200-day moving average and the midpoint of the previous rally, otherwise known as the 50% Fibonacci level.

Despite reaching a strong support level we expect the downtrend to continue providing it can rebreak below the 1.6718 lows.

If so, it would be expected to continue down to the next target at 1.6600.

The MACD which measures momentum is below the zero-line signalling the trend is down.

Data and Events for the Australian Dollar

The Reserve Bank of Australia (RBA) meeting minutes are the main event for the Aussie Dollar in the week ahead.

Investor’s will be closely reading the minutes, which are released at 2.30 BST on Tuesday morning, for signs that officials may be adopting a more optimistic - or hawkish - stance with regards to the economy, as some analysts have claimed.

The other main release is the House Price Index for the first quarter, also out on Tuesday morning at 2.30, which will come under scrutiny for insight into the state of the arguably ‘hot’ housing market.

Last month the Index showed a 4.1% gain.

Data and Events for the British Pound

Following Thursday's surprisingly hawkish MPC debate, where 3 members voted for a 25bps hike in rates and where the minutes took a hawkish tone, "markets will be on the lookout for any comments from BoE officials. Note that Governor Carney’s postponed Mansion House speech will be rescheduled," says Victoria Clarke at Investec.

The week will likely be dominated by politics once again, particularly so given that the economic data calendar is very quiet.

The domestic focus will be on whether the Conservative Party reaches a final deal with the DUP over a confidence and supply agreement, which would provide the government with a narrow majority in the House of Commons.

Reports this week have suggested that a deal between the two parties was close, but that due to the tragic fire at Grenfell Tower a conclusion would be delayed until next week.

Also due next week is the Queen’s Speech which has been rescheduled to Wednesday, whilst formal Brexit negotiations are also set to begin.