• GBP/AUD initially gained on Wednesday but gave up some ground as market digested UK inflation data
• UK inflation hit 3.8% in July, the fastest among G7 nations in 18 months and nearing the BoE’s 4% forecast.
• The data dampened expectations for an imminent BoE rate cut, with traders now eyeing a 0.25% reduction in March next year, down from earlier bets on a cut before the end of 2025.
• Wednesday’s data indicated that transport costs, especially airfares, were the main driver of July’s inflation increase a category BoE policymakers often discount due to its volatility.
• Technical are bullish, daily RSI is at 67, daily momentum studies 9 and 10 DMAs are trending up.
• Immediate resistance is located at 2.1009 (Higher BB), any close above will push the pair towards 2.1132(38.2% fib).
• Strong support is seen at 2.0806 (50% fib) and break below could take the pair towards 2.0639 (SMA 20).
Recommendation: Good to buy on around 2.0900, with stop loss of 2.0760 and target price of 2.1000
