GBPNZD is trending lower but has just pulled up to the channel resistance around the 1.7750 minor psychological mark. If this area keeps gains in check, the pair could head back down to support at the 1.7200 handle.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the gap between the moving averages is widening to reflect stronger selling pressure. The 200 SMA coincides with the channel resistance as well, adding to its strength as a ceiling.
Stochastic is still moving up to indicate that there is some buying pressure left. If bulls stay in control, they could push for a break past the channel resistance and a downtrend reversal for this pair. However, the oscillator is already nearing the overbought level.
The BOE decision turned out more hawkish than expected as three policymakers voted to hike rates due to rising inflationary pressures. This was a relatively tight decision as many had been expecting the central bank to be more cautious owing to Brexit-related risks.
Prior to this, headline and core CPI came in stronger than expected while the claimant count change was also better than consensus. However, the average earnings index and retail sales both fell short, indicating that consumers are feeling the pinch from higher prices of goods.
As for the Kiwi, data has been weaker than expected, with the economy expanding by only 0.5% versus the projected 0.7% growth figure in Q1. However, inflation reports from New Zealand have also been beating expectations and traders might hold out for next week’s RBNZ decision.
By Kate Curtis from Trader’s Way