The GBP/NZD has reached the top of a major short-term resistance area!
Will the UK GDP release today extend the pair’s downtrend?
Before we go any further, ICYMI, yesterday’s watchlist looked at GBP/USD testing range support ahead of the BoE statement. Be sure to check if it’s still a good game!
And now for the main headlines that rocked the markets in the last trading sessions:
Headlines and recent economic data for the market:
Bank of England The bank rate was raised to 4.5% from 4.25% on Thursday as expected. Governor Andrew Bailey has promised that the Bank of England will “continue to stay on course” as inflation falls more slowly than expected.
European Central Bank President Lagarde stressed on Wednesday that more needs to be done to fight inflation. Wage pressures are closely watched by the European Central Bank
Producer price index in the United States For April 2023 it was 0.2% m/m (0.1% m/m forecast) vs. -0.4% m/m prior; Core PPI rose 0.2% m/m as expected vs. 0.0% m/m previously.
Kashkari, voting member of the Federal Open Market Committee He said on Thursday that rates are still very high, which indicates high interest rates for a prolonged period of time
Manufacturing in New Zealand The poll rose from 48.1 to 49.1 in April but is still below the long-term average of 53.0.
New Zealand visitors arrive Up 805% YoY in March but down 2.9% from February and still only 68% of pre-COVID numbers in March 2019
Crude oil Prices rose after the US indicated its plans to refill the Strategic Petroleum Reserve after June
Price action news
There weren’t a lot of market movers during the early Asian trading session, but traders seem to have picked up on the risk aversion seen during the American session.
Look, the Dow and S&P 500 saw losses yesterday on the back of a disappointing US earnings report and the US debt ceiling deadline.
The New Zealand dollar, which fell sharply at the beginning of the American session, fell below its lows in the American session and recorded new lows for the week.
Possible catalysts coming in the economic calendar:
New Zealand Quarterly Inflation Expectations at 3:00am GMT
UK Preliminary Gross Domestic Product in the first quarter at 6:00am GMT
UK Merchandise Trade Balance at 6:00 AM GMT
UK Industrial Production at 6:00 AM GMT
US Preliminary UoM Consumer Confidence at 2:00 PM GMT
NIESR US GDP estimate during the European session
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Forex GBP/NZD for 15 minutes Planned by TV
UK prints GDP read a bit so you know we have to take a look at the GBP crosses!
I’m focusing on the GBP/NZD, which is flirting with the top of a bearish channel that has been in place all month.
The thing is, the top of the channel is also around R2 (1.9940) from today’s standard pivot points.
More importantly, the GBP/NZD has already risen by half Average daily fluctuations.
Are we looking at a short term reversal here?
Markets do not expect the UK’s quarterly and monthly GDP to cause major ripples especially after the Bank of England has already shared its upgraded estimates.
Therefore, unless we see more bullish surprises, traders may take cues from the pivot points and extend GBP/NZD’s short-term downtrend.
I would look at the 1.9850 pivot point mark as potential targets if GBP/NZD shows signs of turning lower.
If the UK GDP numbers come out higher than expected, I could also look at a potential bullish breakout trade.