• GBP/AUD dipped on Friday as pound attracted sellers after reports showed that British government had scrapped plans to increase income tax in its upcoming budget.
• A government source said Friday that Finance Minister Rachel Reeves has dropped plans to raise income tax in this month’s budget, unsettling investors who expected hikes to cover the fiscal gap.
• The FT’s initial report triggered a market selloff, with only a partial rebound after Reuters and others said improved fiscal projections were a key factor.
• Investors had grown confident after Reeves indicated she would take firm measures to meet her goal of balancing the budget by 2029/30..
• Immediate resistance is located at 2.0239(SMA 20), any close above will push the pair towards 2.0382(50%fib).
• Immediate support is seen at 2.0065 (23.6%fib) and break below could take the pair towards 1.9871(Lower BB).
Recommendation: Good to sell around 2.0250 with stop loss of 2.0350 and target price of 1.9950
