• GBP/AUD strengthened as investors digested stronger-than-expected UK inflation data, which cast doubt on the Bank of England's near-term rate cut trajectory.
• Britain’s annual inflation rate accelerated to 3.5% in April, up sharply from 2.6% in March and marking the highest reading since January 2024.
•The sharp increase, driven by persistent wage pressures and housing costs, has prompted markets to reassess expectations for future monetary easing.
• The data has led investors to speculate that the BoE may pause or slow its pace of interest rate cuts, in contrast to earlier bets on a more aggressive easing cycle.
• The chance of a BoE rate cut in August was cut to 40% by investors, down from 60% before the inflation data.
• Immediate resistance is located at 2.0855(50%fib), any close above will push the pair towards 2.0981 (Higher BB)
• Strong support is seen at 2.0623(61.8%fib) and break below could take the pair towards 2.0520(Lower BB).
Recommendation: Good to buy around 2.0845, with stop loss of 2.0750, and target price of 2.0940
