• GBP/AUD slipped to hit two month low on Friday after UK GDP data surprised to the downside, putting renewed pressure on the pound.
• UK GDP fell for the second month in May, raising fresh challenges for Rachel Reeves as global headwinds grow.
• The UK economy contracted by 0.1% in May, following April’s 0.3% drop, the ONS reported.
• The weak data has strengthened market conviction that the Bank of England will cut rates in August, with odds of a 25 bps cut now near-certain.
• Technical signals remain bearish, with RSI at 36 and the 5-, 9-, and 11-day moving averages all trending lower.
• Immediate resistance is located at 2.0655(38.2% fib), any close above will push the pair towards 2.0810 (20 SMA).
• Strong support is seen at 2.0478(March 27th low) and break below could take the pair towards 2.0299(23.6% fib).
Recommendation: Good to sell around 2.0530, with stop loss of 2.0650 and target price of 2.0400
