GBPNZD made a pullback from its recent climb and is currently testing the longer-term rising trend line support. Price is also bouncing off the 38.2% Fibonacci retracement level, although a larger correction could last until the 50% Fib, which lines up with the broken resistance around the 2.3000 level.
Stochastic is already pointing up, suggesting that the climb could resume. If so, GBPNZD could head up to its previous highs near 2.3400 or higher. RSI is also on the move up, confirming that the uptrend could stay intact.
Meanwhile, the 100 SMA is above the longer-term 200 SMA, suggesting that the path of least resistance is to the upside. However, a break below the trend line and 2.3000 major psychological support could be an early signal of a reversal.
GBPNZD Fundamental Factors
Yesterday, data from the UK came in mixed as the manufacturing production report showed a 0.6% drop while the industrial production figure showed a higher than expected 0.4% gain. There are no major economic reports due from the UK today, apart from the government’s annual budget release.
As for the Kiwi, the selloff in Chinese equities is weighing on its gains for now, as this could spell weaker business and consumer confidence in the country, which might eventually translate to lower demand for New Zealand’s dairy exports. The industry is already suffering a slowdown these days since prices have been dropping.
Expectations of an RBNZ interest rate cut in their monetary policy statement this month could also keep the Kiwi weak. However, the pound is also undergoing a bit of selling pressure due to the Greek debt crisis and its negative effects on European economies and currencies.
Nonetheless, the BOE has stated in their previous statements that their next move is still likely to be a rate hike, with analysts projecting that this might take place sometime next year. With that, the pound could continue to advance against the New Zealand dollar.
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