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The Pound to New Zealand Dollar exchange rate starts the new week with another gain and has gone to its highest level since October 13 at 1.9654, further advances are likely over coming days as global investor sentiment looks set to remain shaky.
The New Zealand Dollar is proving highly susceptible to negative investor risk sentiment, of which there is an abundance of, as investors try to make sense of the spread of the Omicron variant of Covid-19.
Markets ended the previous week deep in the red and an attempted rally on Monday morning soon fell flat.
The New Zealand Dollar was one of the biggest losers: GBP/NZD is now up nearly a percent in December already, NZD/USD is down a percent at 0.6744 and EUR/NZD is up 0.85%.
"High-beta and commodity currencies are likely to stay on the defensive until FOMC next week and until we hopefully can exclude some bad scenarios related to omicron," says Anders Eklöf, analyst at Swedbank.
David Croy, Strategist at ANZ, says markets still seem eager to fade the positive NZ story.
"We have come a long way and December usually sees positive seasonality, and 0.6750 is a key support level. But perhaps we should be looking for volatility rather than a trend," says Croy in a forecast update regarding NZD/USD.
Above: NZD against the USD (top) and EUR (bottom).
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He sees support for the exchange rate residing at 0.6700 and 0.6750, resistance is said to be set at 0.7000, 0.7215 and 0.7310.
Regarding NZD/AUD, Croy says the exchange rate "has broken back up through resistance at 0.96. Perhaps rate spreads matter for this cross more than for NZD/USD?"
Support is seen at 0.9360, 0.9430 and 0.9500, resistance is seen at 0.9730 and then 1.000.
Regarding NZD/EUR, Croy says this cross has gone lower as markets singled out the Antipodeans for selling on Friday night.
Support is set at 0.5800 and 0.5900 while resistance is at 0.6160, 0.6200 and then 0.6300.
The GBP/NZD has finally broken below support at 0.51, says Croy, "taking its lead from NZD/EUR. May have less downside if the BoE delay hikes until 2022."
Support for the pair is at 0.5000 and then 0.5055, resistance is seen at 0.5175 first followed by 0.5275.