Pound-New Zealand Dollar Exchange Rate Destined for Lower Levels

- GBP/NZD set for fourth straight day of decline
- 2.0437 is a key pivot to watch
- Analysis suggests levels below 1.90 now possible

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• GBP/NZD spot rate at time of writing: 1.9492
• Bank transfer rates (indicative guide): 1.8810-1.8950
• FX specialist rates (indicative guide): 1.9100-1.9317
• More on acquiring market beating rates here

Pound Sterling is another 0.40% lower against the New Zealand Dollar at 1.9502 the time of writing on Thursday and should the exchange rate close in the red at the time of the day's close then the pair will have registered four successive days of negative closes. Short-term momentum is therefore clearly pitted against Sterling and in favour of the Kiwi.

The decline witnessed over recent days mean the exchange rate is approaching what appears to be a key level of support located in the 1.9456 area: this level propped Sterling up in late 2019 and we wonder whether buying interest for Sterling can be found here once more.

If there are indeed technical buyers then the Pound's decline could fade: we are not suggesting a recovery sequence would necessarily begin, rather the selling could slow.

But, a break below here could usher in a fresh impulse of selling pressure that could open the door to some notably lower levels.

Analysis from Trading Central - a specialist technical trading and intelligence provider - confirms that the daily charts advocate for further losses as long as the Pound-to-New Zealand Dollar exchange rate remains locked below the 2.0437 pivot level.

Momentum remains negative, signified by a RSI indicator that is located below 50. Furthermore, the MACD is negative and below its signal line says Trading Central, "the configuration is negative".

Further adding bear case for GBP/NZD is that the pair stands below its 20 and 50 moving averages located respectively at 2.0105 and 2.0420.

Based on their research, Trading Central identify potential support targets located at 1.9180 and 1.8853 which could be attained under the current technical setup of the market.

The New Zealand Dollar's ongoing run higher against the Dollar has paused on Thursday, in line with a softer tone to global markets.

"The mood in equity markets remained positive yesterday, with S&P 500 (+1.4%); Nasdaq (+0.8%) both finishing higher, as investors focused on the potential economic recovery rather than the ongoing protests. This morning the tone is more muted," says a briefing note to clients from Petronus Partners. "Tensions between the US and China remain, with the Trump administration moving to block Chinese airlines from operating in US airspace."

Commodities remain a key driver to the 'commodity currency' bloc, to which the Australia and New Zealand Dollars are included.

A bellwether for the sector is oil, which slipped in value over the course of the past few hours owing to a a lack of agreement among producers on the extension of supply cuts.

Brent Crude fell back below $40 a barrel.

But it is perhaps dynamics in the iron ore market that are more important for the likes of the Australian Dollar, whose value is linked with to the export of iron ore to China.

Iron ore prices have been on a tear higher over recent weeks, thanks to strong demand from a rebooted China and severe supply constraints out of Brazil. This has left an open goal to Aussie ore exporters, which has aided the currency higher.

However, we have seen iron's sharp rally fade over recent hours, and we wonder whether this could be behind a pause in the Australian Dollar's uptrend. Regardless, we note the market to be in a bull run and we would expect further gains to emerge, particularly as the rest of the global economy follows China in recovery.