Momentum Continues to Swing Into Sterling's Favour

The fundamental picture behind the recent GBP gains is well documented, our live coverage of yesterday's BoE event carries the full story.

Today we assess the impact of recent price action on the technical momentum behind GBP/NZD and thus try to fathom the outlook for this currency pair.

A look at the 2-6 week GBP/NZD chart shows momentum has recently swung firmly towards the British Pound Sterling.

The chart shows 7 bullish events outweighing 3 bearish events.

All 7 of these pro-Sterling events have been formed since the 2nd of August showing just how recently momentum has swung into Sterling's favour.

However, the picture has been clouded over the past 24 hours with the formation of a bearish Commodity Channel Index at 1.9436.

The team at Trading Central also back the GBP over the NZD at present saying, "the upside prevails as long as 1.91 is support."

"The RSI is above its neutrality area at 50. The MACD is positive and above its signal line. The configuration is positive. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 1.9271 and 1.941)."

The short-term charts are showing support found at 1.8162 while resistance is found at 1.9639.

Intermediate term outlook for the Pound versus New Zealand dollar

The intermediate picture, (6 weeks to 9 months) also favours the British pound.

The charts show us 4 bullish events outweighing 0 bearish events.

Long Term Outlook

The longer term picture (more than 9 months) is evenly balanced with 2 bullish events versus 2 bearish events.

It must be noted that the bulls have formed more recently than the bears suggesting the longer term picture is beginning to favour sterling once more.