GBPNZD has been trending higher and is moving above an ascending trend line connecting the latest lows of price action since August 22. Price has surged past the area of interest around 1.8200 and has found resistance at 1.8700 before pulling back.
Applying the Fib tool on its latest swing low and high shows that the 61.8% level lines up with the area of interest and trend line. It also coincides with the 100 SMA, which is above the longer-term 200 SMA to signal that the path of least resistance is to the upside.
The gap between the moving averages is getting wider to indicate that bullish momentum is getting stronger. At the same time, stochastic is indicating oversold conditions and might turn higher to also reflect a return in buying pressure. If that happens, a test of the swing high could be underway.
Economic reports from the UK have been mostly stronger than expected, with CPI, claimant count, and retail sales all surpassing estimates. This supports the BOE’s hawkish stance, even as Carney recently admitted that the rise in global rates was partly the reason for their tightening bias.
As for the Kiwi, data has also been mostly upbeat this week. The GDT auction yielded a stronger 0.9% gain in prices compared to the previous 0.3% uptick while the current account balance reflected a smaller deficit. The Q2 GDP is due next and a 0.8% growth figure is eyed, stronger than the earlier 0.5% expansion.
However, the upcoming RBNZ decision could be preventing the Kiwi from advancing any further as jawboning remarks are expected. The parliamentary elections also poses uncertainty even as surveys hinted a National Party victory.
By Kate Curtis from Trader’s Way