• GBP/USD declined on Tuesday after finance minister Rachel Reeves reiterated her commitment to sticking to her fiscal rules in her November budget.
• In an unusual pre-budget appearance, Reeves outlined her budget as one defined by “hard choices,” focused on reducing Britain’s debt and preserving essential services, while hinting at possible extensive tax hikes.
• Reeves outlined the challenging economic backdrop she faces, citing high debt, weak productivity, and persistent inflation.
• Looking ahead, the Bank of England is expected to pause its rate-cutting cycle on Thursday, though recent softer inflation and wage data could strengthen the case for a cut.
• The odds of a quarter-point rate change stand below 40% in money markets, a shift from late October when investors anticipated no BoE action before spring.
• Immediate resistance is located at 1.3161(38.2%fib), any close above will push the pair towards 1.3292 (50%fib)
• Strong support is seen at 1.3042(23.6%fib) and break below could take the pair towards 1.2996(Lower BB).
Recommendation: Good to sell around 1.3070 , with stop loss of 1.3150 and target price of 1.3000
