August Forex Seasonality: GBP/USD and AUD/USD Face Potential Weakness

The foreign exchange market has been influenced by seasonal patterns since 1971, and August is shaping up to be a crucial month for several major currency pairs. According to FOREX.com, GBP/USD has historically seen its worst monthly performance in August, with an average return of around -0.5% since 1971.

Last month, GBP/USD bounced against the US dollar after navigating the new Prime Minister relatively smoothly. However, the key level to watch this month will be the confluence of the July high and 78.6% Fibonacci retracement of the May-June drop. If that level holds, it hints at potential weakness for the pair.

A similar bearish trend is expected in AUD/USD, which has historically traded lower in August with an average return of -0.6%. A bearish move in line with the seasonal track record could create an 8-month head-and-shoulders topping pattern on the pair with a neckline in the 0.6850 zone.

In contrast, USD/JPY has historically been a bearish month for August, but its performance will depend on how serious Japan and the US are about providing ongoing support to the yen. Continued rate checks and verbal intervention would likely be enough to support the bearish seasonal tendency in USD/JPY.