GBPNZD has been on a tear recently but the pair could be in for even more gains as a bullish continuation pattern can be seen on the 1-hour chart. A pennant or small ascending triangle has formed and an upside break from the resistance could confirm that more gains are possible.
Stochastic is moving down but is nearing the oversold area, which could draw more buyers in. RSI is also heading lower, which suggests that sellers are in control of price action at the moment.
The 100 SMA is way above the 200 SMA at the moment, supporting the idea of further gains for the pair. Bullish momentum would pickup if these moving averages tread farther apart.
GBPNZD Fundamental Factors
Last week, data from the UK was enough to keep pound bulls in play as the inflation report showed a pickup in price levels. This was followed by a stronger than expected average earnings report, which allowed pound pairs to rally even if the Uk jobs figure was below expectations. Afterwards, the UK released a stronger than expected retail sales reading of 0.2% for May.
As for the Kiwi, the GDP came in weaker than expected while the dairy auction showed another decline in prices, setting the stage for another potential RBNZ cut in their next meeting. Earlier today, New Zealand printed a slowdown in visitor arrivals and credit card spending for May.
There are no major reports lined up from both economies for the rest of the week, which suggests the possibility of further consolidation or a continuation of the trend. Of course the Greek debt negotiations could also have a lasting outcome on overall trends in the forex market, as this issue typically affects market risk sentiment.
Nonetheless, the path of least resistance is to the upside since the BOE is more likely to start hiking rates by next year while the RBNZ is facing the prospect of another cut.
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