GBPNZD has formed higher lows and found resistance around the 1.7900 major psychological level, creating an ascending triangle pattern on its 4-hour time frame. Price is still hovering around the triangle support near the 1.7750 mark, still deciding whether to make a bounce or a break.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the moving averages are close to the triangle support, adding to its strength as a floor. Stochastic is still heading down, though, so there’s room for price to drop. Note that the chart pattern is approximately 400 pips tall so the resulting breakout could last by the same amount.
Over the weekend, New Zealand reported stronger quarterly retail sales figures compared to the previous period. Headline retail sales ticked 2.0% higher while core retail sales advanced 2.1%. There have been no reports from the UK economy yesterday.
UK CPI is up for release today and a rebound is expected from 2.6% to 2.7% for the headline reading and from 2.4% to 2.5% for the core figure. Stronger than expected results could revive BOE tightening expectations while weak data could push the pound much lower.
New Zealand has its GDT auction coming up in the next Asian session and a rebound in dairy prices could lift the Kiwi. Quarterly PPI figures are lined up for Thursday.
By Kate Curtis from Trader’s Way