Retail Heavily Short GBPNZD
GBPNZD is a pair worth keeping an eye on currently. The retail market is holding a heavy 85% short position in the pair on the back of a solid bull run off the March lows, suggesting the rally might have room to continue further near-term. GBP has been stronger today on the back of the latest UK labour market data which showed that wages jumped above expectations, and up from prior levels, over the latest measurement period. With wages seen rising, inflationary pressures appear unlikely to have subsided, meaning that further BOE rate hikes remain a clear risk. With this in mind, GBP has seen a fresh wave of buying today.
NZD has been well supported too amidst the general pickup in risk appetite we’re seeing. However, stocks look subject to plenty of two-way risk near-term given the lift in Fed tightening expectations. Additionally, with the RBNZ having scaled back its tightening projections for the year ahead, any fresh uptick in hawkish BOE expectations (particularly if inflation isn’t seen falling last month) should keep BOE/RBNZ divergence in favour of the BOE, supporting GBP near-term.
Technical Views
GBPNZD
The rally in GBPNZD, framed by the bull channel off YTD lows, has seen the market stalling into a test of the 2.0064 level recently. However, with retail heavily short and with momentum studies still bullish, the focus remains on a further break higher and a continuation towards the 2.0317 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.