The string of economic reports out of the UK continues today with CPI, PPI and RPI data on track for release. Since the beginning of the week, economic data out of the UK has been mixed and today’s inflation batch is expected to show a decrease in inflationary pressures. With the election coming closer, and the lead of the Conservatives on the rise, how will the GBPNZD react to today’s economic data? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
The Reserve Bank of New Zealand surprised markets by keeping its interest rate unchanged at 1.00%, expectations called for a 25 basis point interest rate cut. Food prices posted a 0.3% contraction in October and after the interest rate announcement, the New Zealand Dollar rallied. Can bulls push this currency further to the upside or will bears make sure this was just a temporary move? What does this mean for the GBPNZD? Today’s fundamental analysis will take a look at the upside potential as well as downside risk in this currency pair.
Here are the key factors to keep in mind today for British Pound trades:
- UK CPI: The UK CPI for October is predicted to decrease by 0.1% monthly and to increase by 1.6% annualized. Forex traders can compare this to the UK CPI for September which increased by 0.1% monthly and by 1.7% annualized. The Core CPI for October is predicted to increase by 1.7% annualized and the CPI Including Housing Costs is predicted to increase by 1.6% annualized. Forex traders can compare this to Core CPI for September which increased by 1.7% annualized and to the CPI Including Housing Costs which increased by 1.7% annualized.
- UK PPI: The UK PPI Input for October is predicted to decrease by 1.1% monthly and by 4.7% annualized. Forex traders can compare this to the UK PPI Input for September which decreased by 0.8% monthly and by 2.8% annualized. The UK PPI Output for October is predicted flat at 0.0% monthly and to increase by 0.9% annualized. Forex traders can compare this to the UK PPI Output for September which decreased by 0.1% monthly and which increased by 1.2% annualized. The UK PPI Core Output for October is predicted to increase by 0.1% monthly and by 1.5% annualized. Forex traders can compare this to the UK PPI Core Output for September which decreased by 0.1% monthly and which increased by 1.7% annualized.
- UK RPI: The UK RPI for October is predicted to decrease by 0.1% monthly and to increase by 2.2% annualized. Forex traders can compare this to the UK RPI for September which decreased by 0.2% monthly and which increased by 2.4% annualized. The UK RPI Excluding Mortgage Interest Payments for October is predicted to increase by 2.2% annualized. Forex traders can compare this to the UK RPI Excluding Mortgage Interest Payments for September which increased by 2.4% annualized.
- UK House Price Index: The UK House Price Index for September is predicted to increase by 1.1% annualized. Forex traders can compare this to the UK House Price Index for August which increased by 1.3% annualized.
Here are the key factors to keep in mind today for New Zealand Dollar trades:
- New Zealand Food Prices: New Zealand Food Prices for October decreased by 0.3% monthly. Forex traders can compare this to New Zealand Food Prices for September which were reported flat at 0.0% monthly.
- Reserve Bank of New Zealand Interest Rate Announcement: The Reserve Bank of New Zealand kept interest rates unchanged at 1.00%. Economists predicted a 25 basis point interest rate cut to 0.75%. Forex traders can compare this to Reserve Bank of New Zealand’s previous interest rate announcement were rates remained unchanged at 1.00%.
Should price action for the GBPNZD remain inside the or breakout above the 2.0000 to 2.0185 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 2.0075
- Take Profit Zone: 2.0555 – 2.0720
- Stop Loss Level: 1.9900
Should price action for the GBPNZD breakdown below 2.0000 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.9820
- Take Profit Zone: 1.9310 – 1.9500
- Stop Loss Level: 2.0000
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