Pound vs. New Zealand Dollar Week Ahead Forecast: Bullish Bias Fading

GBP to NZD

Image © Adobe Stock

- GBP/NZD trading in range after deep pullback

- Substantial break higher or lower required to determine trend

- New Zealand Dollar to be moved by global risk trends

The Pound-to-New Zealand Dollar exchange rate is trading at around 2.0237 at the start of the new week after falling 0.67% in the week before. Studies of the charts show the pair has pulled back after peaking on October 16 and is now trading in a sideways range with a very marginal bullish bias.

The 4 hour chart - used to determine the short-term outlook, which includes the coming week - shows how the pair has started trading in a sideways range between key support and resistance levels at the August and September 2018 highs respectively.

GBP to NZD four hour

The sideways trend will probably continue in the short-term but a break above or below these key levels would announce a more directional trend.

A break above the 2.0480 Sep 2018 high would probably lead to a continuation higher to a target at 2.0700 eventually.

Alternatively, a break below the 2.001 August high would probably lead to a continuation lower to a target at 1.9800 in the short-term.

The medium-term trend is up, so there is a slight bias to the bullish scenario.

The daily chart shows a similar picture to that painted above only with wider targets.

Daily GBPNZD

Here a break higher would lead to a move up to a target at 2.0800, and a break down to a target at 1.9650 and the trendline.

The daily chart provides a view of the medium-term outlook which includes the next week to month.

The weekly chart shows how the longer-term trend of the pair is somewhat sideways in itself.

Weekly GBPNZD

The longer-term targets lie at 2.1250 for a bullish growth scenario conditional on a break above the September high and 1.9400 for a bearish scenario based on a break below double parity.

The weekly chart is used to give us an idea of the longer-term outlook, which includes the next few months.

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The New Zealand Dollar: What to Watch this Week

The main driver for the New Zealand Dollar in the short-term is probably geopolitical events and anything impacting on the outlook for China, its principal trading neighbour, or global investor risk appetite to which the Kiwi is positively correlated.

The week has started on a positive from the Kiwi’s perspective after the news of another breakthrough in trade negotiations between the U.S-China.

The two sides are closer to signing the text of a deal - an event commentators believe could happen by mid-November.

In recent meetings, negotiators “made headway on specific issues and the two sides are close to finalising some sections of the agreement,” said the U.S. in an official statement.

The Chinese, meanwhile, said trade negotiators had “agreed to properly resolve their core concerns and confirmed that the technical consultations of some of the text agreement were basically completed.”

Ongoing protests in Hong Kong (HK) pose a risk to the trade deal but not a serious one, according to commentators.

Although U.S. Vice President Pence made a speech last week criticising the Chinese authorities for “slashing the rights and liberties” of Hong Kong's citizens, “The speech probably wasn’t aggressive enough to derail trade talks but obviously won’t be helpful either in that regard and we await China’s response,” says Jason Wong, an analyst at BNZ Bank.

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