New Zealand Dollar Highlights

  • GBPNZD finds support around the 2.15 - 2.20 level

  • EU exit set to dominate news for months


Sterling - New Zealand Dollar (GBPNZD) FX Technical Analysis

There’s a growing view amongst analysts that the RBNZ may cut interest rates further this year as they struggle with low dairy prices and low inflation. If they were to cut again, it would help to weaken the Kiwi as the interest rate yield advantage would diminish. Whilst NZ jobs data is improving, there’s enough slack in the economy to merit further monetary easing. Whether this coincides with events over in the UK, it remains to be seen but it would certainly soften the slide in GBPNZD.

GBPNZD has been trading in a downtrend since it topped out last August at 2.50 and it was finding support around 2.15-2.20 level but has failed to break back out of the downtrend, instead accelerating lower last week after Boris Johnson joined those MP’s in the “UK leave” camp. It’s currently holding around the 2.10 level – this proved to be the top of the range on countless occasions through 2011-2014 when GBPNZD was trying to rally higher and consequently this may prove to be a level of support for the moment. A break below here to the downside would open up a fall to 2.0150 next.

Economic data is taking a back seat and will continue to do so where the Pound is concerned. The EU membership vote will take place in the UK on 23rd June and the market isn’t confident that the UK will vote to stay in the EU based on how close the polls are at the moment. This uncertainty is only adding to the Pound's woes and we’re seeing evidence of a slowing UK economy triggered by a fall in business activity – businesses putting off large scale investment into the UK until the vote has happened. Investors and funds alike are trimming their exposure to a potential “Brexit” (Britain leaving the EU) as businesses are taking out large GBP contracts to hedge against possible collapse in the Pound and the net effect is a weakening Sterling.

Forecasting the fortunes of the Pound over the next few months is going to be difficult. In simple terms the Pound may continue to weaken if polls indicate both sides of the coin and until the final ballots are in, the Pound will continue to remain under pressure for the foreseeable future.

The vote is unprecedented; the outcome may also trigger unprecedented shockwaves to the Pound and the immediate impact to the UK economy.

If polls indicate a growing probability of a comfortable win for the ‘In the EU camp’ then over the coming weeks in the run up to June 23rd, the Pound will find support and should stabilise against major currencies.

We suggest you to hedge your bets and trade a portion of funds now if you have them available. Alternatively we suggest you fix the rate on your GBPNZD requirements now if you’re wanting to lock the rate in even if you haven’t got all of the funds available.

With a forward contract you can fix the exchange rate with a 10% deposit and the rate can be fixed for up to 2 years – so if you’ve got funds tied up in a house and you’ve exchanged but you’re not completing for a few months, you can still fix the rate on the proceeds of the house sale. Speak to your Halo consultant for more information about forward contracts.

In planning ahead of the vote in June, you may be of the opinion that the UK will vote to stay in the EU and therefore holding off trading would be the best strategy. You may also conversely believe that the UK will vote in favour of leaving in which case you’ll want to get your funds converted sooner rather than later. For those of you that aren’t sure which way the voting’s going to go we also suggest you to hedge your bets and trade a portion of your funds sooner rather than later.

GBPNZD

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY drops toward 142.00 ahead of BoJ policy decision

USD/JPY drops toward 142.00 ahead of BoJ policy decision

USD/JPY has turned south, approaching 142.00 in the Asian session on Friday. Markets turn risk-averse and flock to the safety in the Japanese Yen while the Fed-BoJ policy divergence and hot Japan's CPI data also support the Yen ahead of the BoJ policy verdict. 

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold price treads water below record peak, awaits Fedspeak

Gold price treads water below record peak, awaits Fedspeak

Gold price hovers below the all-time peak touched earlier this week amid a bearish US Dollar and rising bets for more upcoming rate cuts by the Fed. Concerns over an economic downturn in China keep the safe-haven Gold price afloat. Fedspeak remains on tap. 

Gold News
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

XRP eyes gains as Ripple gears up for stablecoin launch, Grayscale XRP Trust notes rising NAV

Ripple (XRP) gained 2.3% since the start of the week. The altcoin’s gains are likely powered by key market movers that include Ripple USD (RUSD) stablecoin, Grayscale XRP Trust performance and the demand for the altcoin among institutional investors.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures