The ever-strengthening AUD is threatening to send the GBP/AUD cross down to 1.3600, and potentially its October 1976 reaction low at 1.2840.

The persistent GBP/AUD downtrend is similar to the GBP/CHF chart back in June 2011, just prior to the sharp downside break below 1.4400. A base at 1.1485 occurred two months later.

A stable triple-A rating for Australia, and its exposure to global growth predominantly via its trade links with China, help to provide AUD with stability that underpins the currency's strength. Its very high correlation with the uptrend in the S&P 500 is also a factor.

From the GBP/AUD weekly chart below, the break below the September and October lows at 1.4987 and 1.4998 has been sustained, and levels last traded in February 1985 are being set this week.

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Both a rectangle and a bear pennant continuation pattern lie concentric between July 2011 and December 2011, making the downside break all the more valid.

Two downside projections from that period of lateral consolidation land very closely together at 1.3621 and 1.3587.

The close proximity of those measured objectives indicate a likelihood of a significant base in the 1.3587/1.3621 area.

However, the pace of the powerful downtrend does not preclude an extension lower to the October 1976 reaction low at 1.2840. This low will still be the target for long-term GBP bears, but a lengthy period of consolidation at the 1.3600 area will have to occur before creating the groundwork for another downwave to 1.2840.

The 1.5000 level has reverted from support to resistance following January's break. But to undermine the GBP bearish outlook, a break above resistance at 1.5185 and 1.5680 would be needed.