• GBP/AUD edged higher on Tuesday as optimism surrounding presumptive UK PM Burnham supported the pair.
• Market sentiment toward sterling has been underpinned by growing optimism surrounding Andy Burnham, the widely expected next UK prime minister, with investors hopeful that his administration could bring greater political stability and a more predictable economic policy framework.
• However, the longer-term fiscal outlook remains challenging. The Office for Budget Responsibility (OBR) warned that Britain will need substantial fiscal tightening in the years ahead to prevent public debt from entering an unsustainable trajectory.
• Meanwhile, Bank of England Governor Andrew Bailey reiterated that policymakers remain concerned about the possibility of multiple economic risks materialising at the same time, highlighting persistent uncertainty over inflation, growth and global developments as the central bank assesses the path for future monetary policy.
• Immediate resistance is located at 1.9345(23.6% fib), any close above will push the pair towards 1.9389 (Higher BB).
• Strong support is seen at 1.9196(38.2% fib) and break below could take the pair towards 1.9100(SMA 20).
Recommendation: Good to buy around 1.9250, with stop loss of 1.9160 and target price of 1.9340
