Forex Seasonality: August's Bearish Tendencies in Focus

The forex market has its seasonal patterns, and August is no exception. According to City Index UK's analysis of data since 1971, August has been a particularly bearish month for GBP/USD, with average returns around -0.5%. This trend may be exacerbated by the recent election of a new Prime Minister in the UK.

Meanwhile, USD/JPY has historically fallen -0.3% on average since 1971. The key question this month will be how serious Japan and the US are about providing ongoing support to the yen, rather than relying on long-term seasonal tendencies.

A bearish move in AUD/USD could create an 8-month head-and-shoulders topping pattern on the pair with a neckline in the 0.6850 zone.