GBP/NZD is hitting the top of a key short-term resistance zone!
Will today’s U.K. GDP release extend the pair’s downtrend?
Before moving on, ICYMI, yesterday’s watchlist looked at GBP/USD testing a range support ahead of the BOE statement. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Bank of England raised the Bank Rate to 4.5% from 4.25% on Thursday as expected; Governor Andrew Bailey promised that the BOE “stay the course” as inflation falls more slowly than expected
European Central Bank President Lagarde restated on Wednesday that there is more to do to fight inflation; wage pressures is being closely watched by the ECB
U.S. PPI for April 2023 was 0.2% m/m (0.1% m/m forecast) vs. -0.4% m/m previous; Core PPI rose by 0.2% m/m as expected vs. 0.0% m/m previous
FOMC voting member Kashkari said on Thursday that prices remain too hot, signaling high interest rates for an extended period of time
BusinessNZ manufacturing survey inched up from 48.1 to 49.1 in April but still lower than the 53.0 long-term average
New Zealand’s visitor arrivals up by 805% y/y in March but down by 2.9% from February and is still only 68% of the pre-COVID numbers in March 2019
Crude oil prices higher after the U.S. signaled its plans to refill the Strategic Petroleum Reserve after June
Price Action News
Overlay of NZD Pairs 15-min
There were not a lot of market-movers during the early Asian session trading but it looks like traders picked up on the risk aversion seen during the U.S. session.
See, the Dow and S&P 500 saw losses yesterday on the back of disappointing U.S. earnings report and the U.S. debt ceiling deadline.
NZD, which dropped sharply at the start of U.S. session trading, dipped below its U.S. session lows and made new intraweek lows.
Upcoming Potential Catalysts on the Economic Calendar:
New Zealand’s quarterly inflation expectations at 3:00 am GMT
U.K.’s preliminary Q1 GDP at 6:00 am GMT
U.K.’s goods trade balance at 6:00 am GMT
U.K.’s industrial production at 6:00 am GMT
U.S. preliminary UoM consumer sentiment at 2:00 pm GMT
U.S. NIESR GDP estimate out during the European session
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/NZD: 15-min
GBP/NZD 15-min Forex Chart by TV
The U.K. is printing a preliminary GDP read in a bit so you know we gotta take a look at British pound pairs!
I have my eyes on GBP/NZD, which is flirting with the top of a descending channel that’s been around all month.
Thing is, the top of the channel is also around the R2 (1.9940) of today’s Standard Pivot Points.More importantly, GBP/NZD has already risen by half of its daily average volatility.
Are we looking at a short-term reversal over here?
Markets don’t expect the U.K.’s quarterly and monthly GDPs to cause much ripples especially after the BOE already shared its upgraded estimates.
So, unless we see more upside surprises, traders may take cues from the Pivot Points and extend GBP/NZD’s short-term downtrend.
I’ll be looking at the 1.9850 Pivot Point mark as potential targets if GBP/NZD shows signs of turning lower.
If the U.K.’s GDP numbers print higher than expected, then I can also look into trading a potential upside breakout.