• GBP/NZD initially dipped but recovered some ground as sterling bulls find temporary relief as gilts yields pulled back from recent gains.
• However, fiscal worries especially the burden of higher debt servicing costs amid rising global yields are expected to cap sterling’s upside,
• Expectations of higher taxes in the upcoming budget, against the backdrop of a projected £40 billion shortfall, have intensified pressure on Prime Minister Keir Starmer and Finance Minister Rachel Reeves to deliver credible plans for reviving the UK economy.
• On the data front, Britain’s services sector expanded at its fastest pace in over a year last month, boosted by a surge in new business and easing U.S. tariff concerns.
• The S&P Global UK Services PMI rose to 54.2 in August from 51.8 in July, marking its strongest reading since April 2024.
• Immediate resistance is located at 2.2868(SMA 20), any close above will push the pair towards 2.2982 (20 SMA).
• Strong support is seen at 2.2772 (50%fib) and break below could take the pair towards 2.2577(61.8%fib).
Recommendation: Good to sell around 2.2900 with stop loss of 2.2980 and target price of 2.2850
