The GBPNZD currency pair has continued its upward trajectory in 2024, building on its impressive 6% gain from the previous year. Currently trading 2.58% higher year-to-date, this ascent is primarily attributed to the resilience of the British Pound.
Bolstering the Pound’s strength is a series of upbeat economic indicators, signalling a robust U.K. economy. Notably, a slight increase in U.K. inflation to 4% in December fuelled expectations of prolonged higher interest rates by the Bank of England (BOE), further boosting the Pound’s appeal. Additionally, January saw an uptick in manufacturing and services activity, reflected in a composite PMI of 52.9, surpassing expectations.
However, the Reserve Bank of New Zealand’s slightly higher interest rate of 5.50% compared to the BOE’s 5.25% presents potential downside challenges for the GBPNZD pair, as higher yields in New Zealand may attract traders and investors seeking larger returns. The upcoming release of New Zealand’s employment change data this week could further influence the trajectory of the GBPNZD pair, making it a pivotal event for market participants to watch closely.
Technical
The GBPNZD currency pair has demonstrated resilience amidst recent market dynamics, marked by five consecutive weeks of gains before a minor setback last week.
Its upward trajectory is characterized by trading within an ascending channel pattern, consistently maintaining a position above the 100-day moving average. However, recent bearish pressures have led to the pair converging with and briefly breaking below this moving average.
Following a temporary dip, the rally commenced from the 2.03527 level midway through January, forming a notable support level. Despite reaching the 2.09432 level, where overbought RSI conditions prevailed, the pair faced resistance, prompting a retracement. Subsequently, it found support at the 50% Fibonacci Retracement level after breaking below the lower boundary of the ascending channel pattern. The continuation of bullish momentum could potentially drive the pair towards the 2.09432 level, while a breakdown below the 50% level might expose it to further downside risks, potentially targeting the 61.80% Golden Ratio.
Summary
In conclusion, while the GBPNZD pair experiences an upward trajectory fuelled by the British Pound’s strength, challenges could lie ahead due to the Reserve Bank of New Zealand’s higher interest rates. Technical analysis suggests potential upside towards the 2.09432 level, with downside risks if the pair breaks below the 50% Fibonacci Retracement level.
Sources: Bank of England, S&P Global, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.
