GBPNZD has been on a long-term climb but the pair seems to be in the middle of a major correction from the recent rally. Price surged past the resistance around 2.3200 and rallied close to the 2.4000 major psychological mark before showing signs of a pullback.
The pair could draw support from the 50% Fibonacci retracement level, which is just above the broken resistance and is near the longer-term rising trend line. This is also in line with the long-term 200 SMA, which has held as dynamic support in the past. The 100 SMA is above the 200 SMA, suggesting that the uptrend could carry on.
In addition, stochastic is moving out of the oversold region, suggesting a pickup in buying momentum. RSI is also heading north, which means that selling pressure is already exhausted and that the correction could be over soon.
GBPNZD Fundamental Forecasts
Event risks for this GBPNZD trade include the BOE minutes, RBNZ decision, and the UK retail sales release. The BOE minutes are expected to be bullish for the pound since policymakers expressed a shift to a more hawkish stance in the latest Inflation Report hearings.
As for the RBNZ decision on Thursday, an interest rate cut is expected to follow their easing move back in June since dairy prices have continued to tumble and the economy needs more support. Inflation has also been weaker than expected, increasing the odds of seeing more rate cuts before the end of the year.
The UK retail sales report for June could show a 0.4% gain in consumer spending, although many are expecting an upside surprise since wage growth has been really strong. Apart from that, consumer inflation has remained subdued in the past months, suggesting that people might’ve taken advantage of the cheaper price levels and the increase in salaries to pump up their purchases.
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