Source: PaxForex Premium Analytics Portal, Fundamental Insight
New Zealand Westpac Consumer Confidence for the third quarter came in at 87.6. Forex traders can compare this to New Zealand Westpac Consumer Confidence for the second quarter, reported at 78.7.
The New Zealand Trade Balance for August came in at -NZ$2,447M monthly and at -NZ$12,280M annualized. Forex traders can compare this to the New Zealand Trade Balance for July, reported at -NZ$1,406M monthly and -NZ$11,970M annualized. Exports for August came in at NZ$5.48B and Imports at NZ$7.93B. Forex traders can compare this to Exports for July, reported at NZ$6.35B, and Imports, reported at NZ$7.76B.
The US Federal Reserve delivered its expected third consecutive 75 basis point interest rate increase yesterday. It also communicated that it plans to hike until it reaches a level between 4.50% and 4.75%, which could translate into two more 75 basis point hikes before it would pause and maintain rates at those levels until the end of 2023.
The Bank of England is predicted to hike interest rates by 50 basis points to 2.25%. Forex traders can compare this to the previous Bank of England meeting, where the UK central bank raised interest rates by 50 basis points to 1.75%. Traders should monitor the press release following the announcement for clues about potential changes to monetary policy and the inflation outlook. The UK central bank previously announced it expects a UK recession in the fourth quarter, expected to last throughout 2023. It is unusual for central banks to increase borrowing costs into a recession, but previous monetary errors forced developed markets into a corner. The cost of living crisis across the developed world expands, and debt-fueled programs to help citizens will increase the long-term problems.
The forecast for the GBP/NZD remains bullish after this currency pair completed a breakout above its Ichimoku Kinko Hyo Cloud. Volatility could increase as bulls attempt to confirm the move while bears seek to reverse it. Both camps receive support, where bulls benefit from the ascending Tenkan-sen, and bears lean on the flat Kijun-sen and descending Senkou Span A. Traders should monitor the CCI after it recorded a higher high in extreme overbought territory followed by a breakdown. It could drift marginally lower but remains above zero, from where more upside is favored. Can bulls withstand short-term bearishness and push the GBP/NZD 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 1.9225 to 1.9370 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.9295
- Take Profit Zone: 1.9535 – 1.9630
- Stop Loss Level: 1.9180
Should price action for the GBP/NZD breakdown below 1.9225 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.9110
- Take Profit Zone: 1.8900 – 1.9000
- Stop Loss Level: 1.9225
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