Pound slides as UK restarts COVID-19 restrictions

The New Zealand dollar declined today as traders reacted to the Reserve Bank of New Zealand interest rate decision. The bank left interest unchanged at 0.25% and the target of its Large-Scale Asset Purchases (LSAP) at N$100 billion. It also pledged to start another fund to help support New Zealand companies and consumers. At the same time, the bank is still considering implementing negative interest rates for the first time ever. The decision came a few days after data from New Zealand showed that the economy contracted by ~12% in the second quarter.

The British pound declined today as the market reacted to the rising number of covid-19 cases and the relatively weak manufacturing and services PMI data. Numbers released by Markit showed that the manufacturing PMI declined to 54.3 in September. That was lower than the increase of 55.2 recorded in the previous month. At the same time, the services PMI declined from August’s 58.8 to 55.1. Subsequently, the composite PMI fell from 59.1 to 50.1. Meanwhile, the number of covid-19 cases is increasing. The country reported more than 4,900 cases yesterday even as the government restarted some restrictions.

The euro pared back some losses as traders reacted to news that the Eurozone economy has started to slow down. Data from Markit showed that the manufacturing PMI increased from 51.7 to 53.7. That increase was mostly from Germany, where the PMI increased from 52.2 to 56.6. However, the services sector, which employs the most people in Europe contracted for the first time in four months. The PMI fell from 50.5 to 47.6. In France and Germany, the PMI fell to below 50.

EUR/USD

The EUR/USD pair shows that the EUR/USD pair fell to an intraday low of 1.1671 and then rose to the current level of 1.1712. The four-hour chart shows that the pair is below the neckline of the head and shoulders (H&S) at 1.1750. It is also slightly above the 38.2% Fibonacci retracement level. It has also moved above the lower line of the Donchian channel. This means that the pair is likely to continue rising as bulls aim for the middle line at 1.1771. 

GBP/USD

The GBP/USD is trading at 1.2730, which is a few pips above the intraday low of 1.2677. On the four-hour chart, the price is along the 61.8% Fibonacci retracement level. It is also below the bearish pennant that formed last week while the RSI is slightly above the oversold level of 30. The price is likely to continue falling as bears aim for the next support level at 1.2500.

NZD/USD

The four-hour chart below shows that the NZD/USD formed a double top pattern at 0.6800 this month. Since then, the pair has been in a strong downward trend. And today, it reached an intraday low of 0.6590, which is the lowest it has been since August 26. It is below all the short and longer-term moving averages and is along the lower line of the Bollinger bands. Therefore, it seems like bears have prevailed, which is likely to see the price continue the downward trend.