Can The GBPNZD Rally Spur On?

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.  


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. 


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 

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