• GBP/AUD slipped lower on Wednesday as selling pressure hit the British pound, triggered by a sharp selloff in UK government bonds.
• British bonds saw their worst selloff since October 2022, following the government’s sharp rollback of benefit cuts and rising speculation over the future of the finance minister.
• That marked the biggest one-day spike in UK benchmark yields since October 2022, when Liz Truss’s mini-budget triggered market turmoil and ultimately led to her resignation as Prime Minister.
• Meanwhile, Bank of England policymaker Alan Taylor warned Wednesday that the UK’s soft landing is now at risk, adding that recent data supports five interest rate cuts in 2025 instead of the previously expected four..
• The BoE kept rates steady at 4.25% last month, and markets are pricing in two more 25-basis-point cuts, expecting rates to fall to 3.75% by year-end.
• Immediate resistance is located at 2.0930(Daily high), any close above will push the pair towards 2.1036(38.2%fib)
• Support is seen at 2.0611 (50%fib) and break below could take the pair towards 2.0552(Lower BB).
Recommendation: Good to buy around 2.0630 with stop loss of 2.0560 and target price of 2.0760
