GBPNZD bounced a couple of times off the 1.7400 level, creating a double bottom pattern with a neckline at the 1.7850 minor psychological level. Price has yet to break past the resistance before confirming that a longer-term uptrend is in order.
The 100 SMA is above the longer-term the 200 SMA to confirm that the path of least resistance is to the upside. The 100 SMA is close to the neckline, adding to its strength as resistance. If it holds, another move towards the bottoms could take place.
Stochastic is moving up to show that there’s some bullish momentum in play, possibly enough to trigger a neckline breakout. However, the oscillator is also nearing overbought levels so buyers might want to pause soon and let sellers take over.
The BOE decision is the main event risk for the day as traders are waiting to find out if the central bank can maintain its hawkish views from the previous announcement. At that time, three policymakers voted for a hike on stronger inflationary pressures but the latest batch of CPI readings have disappointed.
A less hawkish bias could push the pound lower against its peers while an actual rate hike might be needed to keep the pound afloat. Other reports have indicated mixed results, with hiring staying strong and retail sales trying to hold steady. Business PMI readings have also reflected some resilience.
As for the Kiwi, the weaker than expected quarterly jobs report released earlier this week could keep the currency on the back foot. Employment fell by 0.2% instead of rising by 0.7% while the previous quarter’s gain was downgraded to 1.1%.
By Kate Curtis from Trader’s Way