GBP/NZD Buyers Face a Critical Resistance Test
Market Overview
The New Zealand dollar (NZD) weakened on Tuesday amid growing concerns over a potential recession driven by US trade policies. Investor sentiment remained fragile after US President Donald Trump described the economy as being in a “transition phase” during his Sunday interview but failed to reassure markets.
Ongoing trade tensions and retaliatory tariff measures among major economies have exerted additional pressure on the export-reliant NZD, raising concerns about declining external demand. Meanwhile, in New Zealand, the market has already priced in three additional rate cuts for 2024, reflecting a dovish economic outlook and weighing further on the currency.
In contrast, the British pound (GBP) is benefiting from the broader weakness in the US dollar, which has declined amid fears of an economic slowdown in the United States. This divergence has allowed GBP/NZD to maintain its two-week uptrend, as the pound remains resilient despite softer UK retail sales data.
Technical Analysis
The GBP/NZD pair, trading on the four-hour timeframe, has been consolidating within a sideways range over the past few sessions, fluctuating between the upper boundary at 2.26640 and the lower boundary at 2.24760.
For bullish momentum to continue, buyers need to break above the upper resistance at 2.26640, which has been capping gains. If they succeed, the next immediate targets are set at 2.27151, 2.27802, and 2.28520, representing key resistance levels that could confirm the resumption of the broader uptrend.
Momentum indicators such as RSI and MACD support the bullish outlook, with RSI trending upwards above 50, indicating that buying pressure remains intact. The MACD histogram is expanding above the zero line, reinforcing the positive sentiment in the market.
On the downside, if sellers regain control, they must first break below the 2.25922 support. A clear breach of the 2.24760 level would shift the outlook to bearish, triggering further declines.
Key Technical Levels
- Resistance 1: 2.27151
- Resistance 2: 2.27802
- Resistance 3: 2.28520
- Support 1: 2.25922
- Support 2: 2.24760
Fundamental Drivers
Recent economic data from New Zealand showed a 0.8% increase in manufacturing sales for Q4, marking the first positive quarterly growth in nine periods. However, this has not significantly boosted NZD, as broader economic uncertainty and monetary policy expectations remain the dominant themes in the market.
Meanwhile, in the UK, the latest BRC retail sales report indicated slower-than-expected growth in February, signaling moderating consumer demand. However, the impact on GBP remains limited as the currency continues to gain traction from USD weakness and investor repositioning ahead of upcoming economic events.
Conclusion
The GBP/NZD pair remains in a neutral range, with bullish momentum building towards a breakout above 2.26640. A successful move higher could confirm further gains toward 2.28520, while failure to break higher may lead to a retracement towards 2.24760 support.
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