New Zealand Dollar Predicted to Maintain Uptrend against Sterling Over Coming Days
The Pound to New Zealand Dollar exchange rate is seen to be maintaining its downtrend at the start of the new trading week.
At the time of writing the pair is quoted at 1.7497 with the recent break below the key 200-day moving average (MA) being a significant bearish sign and we expect further downside to come as a result.
Currently the pair is going sideways and has seen some strength due to the Reserve Bank of New Zealand’s (RBNZ) less hawkish than expected outlook (hawkish means inclined to increase interest rates).
Whilst the economy is doing well, the RBNZD do not want to sound too optimistic as that would strengthen the New Zealand Dollar and impact negatively on exporters.
Despite stalling and going sideways the down-trending bias remains intact.
As such our forecast is still bearishly inclined, viewing a continuation lower to 1.7300 as the most likely objective, to be confirmed by a break below the 1.7387 lows.
Data and Events for the New Zealand Dollar
New Zealand data kicks off with the release of the Trade Balance on Monday June 26 at 23.45 BST.
The Trade Balance is expected to show a minor narrowing of the deficit to -3.48bn from -3.9bn in May 2016.
The data is unlikely to have a major impact on NZD trading and we would expect the currency to continue taking instruction from global market sentiment.
ANZ Business Confidence in June is then out at 02.00 on Thursday June 29.
Politics Central for Pound this Week
On the agenda for Sterling this week:
- Ongoing debate around of Brexit negotiations
- The Government’s alliance with the DUP to allow it to govern
- The debate on the Queen’s Speech, with a vote expected on Thursday
- The government is also expected to present details of proposals on rights for EU citizens after Brexit on Monday.
One of the main events for Sterling in the week ahead is the voting of parliament on the Queen’s speech, which is to be held on Thursday 29.
The event should pass by without little hitch though owing to the successful signing of a pact between the DUP and Conservative parties.
In exchange for a number of key policy pledges and spending, the DUP will support the Government's agenda in Parliament.
This will allow May to Govern effectively and removes a key piece of uncertainty in the UK political sphere. .
The only other events of any note is Bank of England Governor Mark Carney's appearances on Tuesday at 11.00 BST and Wednesday 14.30 at the ECB's central banker's forum.
Markets will be looking for any hints that he supports raising interest rates in the UK, as does the Bank's Chief Economist Andy Haldane.
The Pound dropped last week when Carney said he would not support a rate rise only to rally the following day when Haldane said he would support such a move.
If those looking to raise rates win the argument, we would see another pillar underneath Sterling fall in place.
