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GBPNZD in focus as Central Banks jaw-jaw

Market Analysis

GBPNZD, H4                 

UK consumer lending rose more than expected in May data. Consumer credit lifted GBP 1.7 bln, up from GBP 1.5 bln in April, while mortgage approvals rose to 65.2k form 65.0 k (upwardly revised from 64.5k), about the median forecast for 64.0k. The BoE has been mooting the risks of rising consumer indebtedness, which this data seems to underscore (the central bank’s semi-annual financial stability report this week advised banks to up their counter-cyclical measures, while Governor Carney, during a press conference, advised consumers to do their own individual contingency planning). Sterling has rallied this week as expectations of rate rises from the BOE appear on the horizon. One country where rates are definitely not likely to rise anytime soon is New Zealand and as the interest rate disparity between the Kiwi and other currencies reduces we have seen some opportunities appear in NZD pairs.

GBPNZD close over the 20 DMA and the 23.6 Fibonacci retracement level of the May high at the 1.8900 zone yesterday. This triggered long positions in both the 4hr and Daily charts and entry was filled today at 1.7755.  The H4 chart offers target 1 at the next fractal high at 1.7809 and target 2 at 1.7854 (a gap from June 8). H4 intraday support is around the 1.7638 congestion zone and with RSI over 70 there could be some retracement from current levels. The parabolic SAR remains positive.

2017-06-29_13-39-13

The Daily chart has a solid six day base around 1.7390 and the breach and break of the 20 DMA and 23.6 Fib was preceded by Tuesdays (June 27) strong bullish engulfing candle and a further positive candle yesterday which provided our conformation.  Target 1 on the daily chart is 1.7870 and target 2 at the 38.2 Fibonacci retracement level at 1.7930 and the top of the gap from June 8. RSI is 47 and rising and the parabolic SAR turned positive following Tuesday’s strong move.

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Stuart Cowell

Senior Market Analyst

HotForex

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