Source: PaxForex Premium Analytics Portal, Fundamental Insight

The New Zealand Trade Balance for April came in at NZ$584M monthly and at -NZ$9,120M annualized. Forex traders can compare this to the New Zealand Trade Balance for March, reported at -NZ$581M monthly and -NZ$9,300M annualized. Exports for April came in at NZ$6.31B and Imports at NZ$5.73B. Forex traders can compare this to Exports for March, reported at NZ$4.48B, and Imports at NZ$7.06B.

New Zealand Credit Card Spending for April increased 1.1% annualized. Forex traders can compare this to New Zealand Credit Card Spending for January, which rose 3.5% annualized.

UK GfK Consumer Confidence for May came in at -40. Economists predicted a figure of -39. Forex traders can compare this to UK GfK Consumer Confidence for April, reported at -38.

UK Retail Sales for April are predicted to decrease 0.2% monthly and 7.2% annualized. Forex traders can compare this to UK Retail Sales for March, which dropped 1.4% monthly and rose 0.9% annualized. UK Core Retail Sales for April are predicted to contract 0.2% monthly and 8.4% annualized. Forex traders can compare this to UK Core Retail Sales for March, which decreased 1.1% monthly and 0.6% annualized.

Recession fears globally increase, financial markets resume their bear market trend, and economic indicators confirm their slowdown. Inflation continues to pose the most significant threat, and central banks, led by the US Federal Reserve, tighten monetary policy. While a US recession appears more likely, after April Leading Indicators posted a surprise 0.3% drop, traders should brace for a prolonged period of stagflation, with overall economic conditions similar to the mid-60s through the late-70s. After the Bank of England became the first central bank to acknowledge stagflationary pressures, causing the British Pound to plunge, it is now best positioned to outperform G20 peers.

The forecast for the GBP/NZD remains bullish, but volatility is likely to increase as price action moves through its narrowing Ichimoku Kinko Hyo Cloud, which nears a bullish crossover. The ascending Senkou Span A is on course to move above the descending Senkou Span B. Adding to bullishness is the upward moving Tenkan-sen, but the flat Kijun-sen hints at the lack of short-term bullish momentum. After forming a negative divergence in extreme overbought territory, the CCI moved below 100, but it remains in positive conditions. Traders should monitor this technical indicator, and if it can record a higher low, more upside is likely. Can bulls maintain control over the GBP/NZD and pressure it into its horizontal resistance area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.

Should price action for the GBP/NZD remain inside the or breakout above the 1.9410 to 1.9600 zone the following trade set-up is recommended:

• Timeframe: D1           
• Recommendation: Long Position
• Entry Level: Long Position @ 1.9500
• Take Profit Zone: 2.0210– 2.0330
• Stop Loss Level: 1.9350

Should price action for the GBP/NZD breakdown below 1.9410 the following trade set-up is recommended:

• Timeframe: D1           
• Recommendation: Short Position
• Entry Level: Short Position @ 1.9350
• Take Profit Zone: 1.9035 – 1.9145
• Stop Loss Level: 1.9410

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