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5-Day Technical Outlook: Pound to New Zealand Dollar Rate

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The Pound to New Zealand Dollar exchange rate (GBP/NZD) is currently in a short-term downtrend which is broadly expected to continue over the next five days.

There are no bullish reversal signs – in fact quite the contrary – the pair has just formed a bearish set up after forming two weak up days in the midst of a downtrend.

Research shows that when this happens, there is a roughly 66.0% chance that the next day (Monday) will be bearish, as it is rare to find three consecutive up-days in a downtrend.

The 4hr chart shows a step down from the 1.7900 highs, but this may just be a correction, and it would require a break below the 1.7570 lows to confirm the start of a new mini-down trend to the next target at 1.7400.

Data, Events to Watch for the New Zealand Dollar

The big event in the week ahead is the meeting of the Reserve Bank of New Zealand (RBNZ) on Wednesday, August 9 at 22.00 BST.

The RBNZ is expected to keep rates at 1.75% and to maintain a neutral stance in relation to their outlook.

Assuming this happens there is unlikely to me much of a reaction from he Kiwi.

“Unanimous consensus expects an unchanged cash rate of 1.75% at Wheeler’s last MPS, although the press conference may be more lively than usual. We don’t expect a shift from Wheeler’s prior and long-held neutral stance, and expect an unchanged cash rate profile, i.e. flat until H2 2019,” say TD Securities ahead of the event.

Analysts at BNP Paribas meanwhile warn that the RBNZ might seek to keep a lid on the strengthening New Zealand Dollar:

"The RBNZ may also be concerned about continued NZD strength; our estimates suggest that NZD strength still presents a significant headwind for inflation. Concerns about softer inflation could prompt a dovish tone from the RBNZ, which could lead to the market’s long NZD position being unwound."

Other data includes Electronic Card Sales, which are forecast to rise 0.3% month-on-month in July when data is released at 23.45, also on Wednesday.

On Thursday, August 10, Business NZ PMI is released, at 23.30.

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Data for the Pound

A rather thin week for UK data kicks off on Monday morning with Halifax House prices at 8.30 BST and the consensus estimate arguing for a 2.0% rise year-on-year and a 0.2% rise month-on-month.

Given House Prices fell a hefty -1.0% in June, analysts will be checking whether that was just a blip on the cardiogram rather than a deeper decline as a consequence of the economic slowdown.

Then at 00.01 on Tuesday, the BST, British Retail Consortium’s Retail Sales monitor will be released.

This is a sentiment survey asking people in the Retail sector how things are going.

Analysts may being paying more attention to it given the rising rate of inflation and the squeeze in real earnings this has created.

On Thursday, August 10, the RICS House Price balance is to be released, with a probable 8.0% rise expected.

The most important event for Sterling this week comes at 9.30 on Thursday we have Industrial and Manufacturing Production for June.

Previous monthly readings have confirmed the sector to be in contraction, and it appears market expectations aren't any more constructive for when it comes to the June data.

Manufacturing production is forecast to read at 0%, up from the previous month's -0.2%.

Industrial production is forecast to read at 0.1%, an improvement on the previous month's -0.1%.

With expectations regarding Sterling and the UK economy in a downbeat mode, positive surprises on the data front could provide some welcome upside for the currency.

The Trade balance for June is out at the same time, and is expected to show the deficit narrowing to 11.00bn from 11.86bn previously.

 

 

 

 

 

 

 

 

 

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