GBPNZD has been on a steady uptrend, with a rising trend line connecting the recent lows of forex market price action on the daily time frame. Weak data from the UK, which includes lower inflation readings and a smaller than expected pickup in hiring, are currently weighing on the pound and triggering a retracement.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 2.0000 major psychological support lines up with the rising trend line and an area of interest. This suggests that a bounce off that level might happen and push price back up to its previous forex market highs.
Forex Market Movements
Stochastic is still moving lower, indicating that there’s a bit of selling pressure left enough to trigger a test of 2.0000 in the near term. Once the oscillator moves out of the oversold zone, price could resume its climb.
Of course this depends on the forex market event risks, which currently favor lower-yielding currencies. The shift in BOE stance doesn’t appear to be doing the British pound any favors for now as the central bank has expressed concerns on the pending euro zone recession and the IMF’s global growth forecast downgrades.
As for New Zealand, the recent GDT auction showed better results, putting an end to the continuous decline in dairy prices for the past months. This could give the Kiwi a boost against its forex counterparts in the short term, which might lead to a rising trend line test for GBPNZD.
Bear in mind that this pair has huge price swings so wide stops might be more appropriate for this trade setup. The pair usually moves around 200 pips in a day so the trade should be given more leeway than usual. Forex market risks are minimal for the rest of the trading week, although the following week as the BOE minutes due.
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