The Australian Dollar fell after the Deputy Governor of the country’s Central Bank warned that Australia may not follow other G10 central banks who are positioning themselves for interest rate hikes soon.

Debelle said that just as interest rates in Australia didn’t fall as a low as in other parts of the world– they only reached as low as 1.5% - so the, “fact that other central banks increase policy rates does not automatically mean that the policy rate here need to increase.”

The comments proved disappointing for those who were betting on further Australian Dollar strength on the back of the assumption that the RBA would look to soon raise interest rates again.

The Pound to Australian Dollar exchange rate rapidly rose following the comments rising from 1.6340 to 1.6440.

Debelle’s comments mark a significant change in the monetary policy outlook but has this changed the technical outlook for the pair?

The GBP/AUD pair has already moved substantially lower this week, breaking below the 200-day moving average and the previous 1.6600 lows.

The initial impulse lower followed the RBA meeting at the start of the week, in which the economy’s positives were highlighted.

This surprise retrenchment by Debelle, suggests that driver may be spent and that the RBA is nervous of the AUD becoming too expensive.

Concerning the outlook, our technical studies suggest the pair is close to our previous downside target at 1.6200 where a major trendline connecting the October 2016 and March 2017 lows provides a natural point of halt.

However, the RBA Deputy’s comments pulled the pair higher before it could reach that target.

Is 1.6200 still achievable?

Theoretically yes, since the short-term downtrend which has been in play since the 1.7600 highs rolled over, remains intact, however, we would first want to see a break back below the 1.6269 lows again for confirmation - and that only leaves 69 pips of downside potential left before target – small change.

Get up to 5% more foreign exchange by using a specialist provider. Get closer to the real market rate and avoid the gaping spreads charged by your bank for international payments. Learn more here.It is possible the exchange rate could be at the start of a bigger correction, however, it is too early to say for sure yet.

A larger abcd pattern which has formed after the exchange rate fell down from the early June highs at 1.74/5, now looks complete, or almost complete.

The pattern’s c-d wave is now about equal to the a-b, which suggests it might be nearly complete.

If it is then the next move will be a countertrend correction, or sideways move.

The MACD is not particularly bearish and reveals a lack of momentum in the c-d part of the downmove.