The Pound-to-New Zealand Dollar Rate's Forecast For the Week Ahead

- GBP/NZD remains trapped in a sideways range mostly encompased by the lower 1.90s

- The main release for Sterling in the coming week is first quarter GDP growth data 

- The principle release for the New Zealand Dollar is the trade balance 

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The GBP/NZD pair continues trading below its 1.9500 glass-ceiling as the new trading week begins.

One Pound buys 1.9421 New Zealand Dollars at the time of writing, almost a cent higher than the previous week when it only bought 1.9333.

It is a marginal change overall, the GBP/NZD continues finding its equilibrium rate between 1.89 and 1.97 - the relatively narrow range floor ceiling in between which it has been trading ever since the end of 2017.

Previously we thought the daily chart of GBP/NZD was showing a breakout from a triangle pattern, however, we are not as certain now that the pattern was a bona fide triangle as there was no volatile breakout as would be expected, and the pair continues moving within the range outlined above.

Normally we would expect an upside breakout as the previous trend was up, but above 1.98 the going is likely to get tough as the pair meets the 200-week moving average at 1.9803.

Uptrending prices often stall, pull-back or even sometimes reverse at the level of large moving averages like the 200-week, because they are used by large speculators, fund managers and retail traders alike as a decision-making tool, and are therefore subject to greater-than-average levels of liquidity.

The pair may even reverse the trend from the 200-week and start falling.

Another obstacle to the further upside is the 2.000 exchange rate level which is a major round-number and therefore subject to increased amounts of buying and selling in its vicinity. This is because it is more likely to be singled out as a level at which traders will decide to take profit. 

We have illustrated the barrier-like resistance of these levels on the chart as zones of orange clour. It is only if the exchange rate manages to break clearly above this zone that we would expect more upside and this is unlikely in the week ahead. 

Data and Events to Watch for the New Zealand Dollar

The main data release of significance for the New Zealand Dollar in the coming week is the Trade Balance in March, which is expected to show a surplus of 200m New Zealand Dollars (Kiwis) compared to 217m in the previous month, when it is released at 23.45 GMT on Tuesday, April 24.

Generally, a higher surplus is better for a currency as it shows a greater demand for the host currency from foreign buyers of its exports.

Other data for the Kiwi in the week ahead include the Roy Morgan Consumer Confidence gauge for April, which is out at 11.00 also on Tuesday.

News and Data to Watch for the Pound

The main release for the Pound in the week ahead is the first release of GDP growth data for the first quarter of 2018, which is out at 9.30 GMT on Friday, April 27.

Expectations are for growth to slow slightly to 0.3% quarter-on-quarter (qoq) compared to 0.4% in Q4 and to remain unchanged at 1.4% compared to the year before (yoy).

This is no doubt due to the bad weather in Q1, but given growing doubts about the UK's economy in general the market may be expecting a lower result, which would further lower the probability of the BOE raising interest rates in May.

From being 96% certain the BOE would hike interest rates two weeks ago, the market is now only 50% sure - a lower GDP reading would reduce that even further. Generally higher interest rates equal a stronger currency and vice-versa as higher rates attract inflows from foreign investors drawn by the promise of higher returns.

Some analysts are even more pessimistic about Q1 growth.

"We are penciling in a slowing in the growth pace from +0.4% qoq in Q4 2017 to +0.2% in Q1. Furthermore, if anything, risks look to be to the downside of a +0.2% print," says Ryan Djajasaputra of Investec.

Although Djajasaputra puts it down almost entirely to bad weather rather than anything else, and thus a temporary negative.

"We suspect that Q2 GDP will not look quite as soft, especially with the household cash squeeze slowly turning around," adds the analyst.

Apart from GDP data, there are no other top-tier releases for the Pound in the coming week, but GfK Consumer Confidence is expected to continue showing a negative -7 reading in April when it is released on Friday at 00.01.

There are also three surveys from the Consortium of British Industry (CBI), the Business Optimism Index and the Industrial Trends Orders at 11.00 on Tuesday, followed by the Distributive Trades survey on Thursday at 11.00, which is forecast to show a rise to 5 from -8.

In addition, Public Sector Borrowing figures for March are out on Tuesday at 9.30.

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