GBP/NZD Buyers Face Key Resistance Amid Market Rebound
Market Overview
The British pound (GBP) continues its recovery momentum as January comes to an end, bolstered by declining bond yields and increasing investor confidence in potential policy adjustments to support the UK economy. While the market still anticipates a gradual rate-cut cycle from the Bank of England (BoE), recent statements from policymakers suggest that further stimulus measures may be necessary, providing short-term support for the GBP.
Meanwhile, the New Zealand dollar (NZD) has exhibited weakness, driven by softening economic data from China—New Zealand’s largest trading partner. The ongoing Lunar New Year holiday in Asian markets has also reduced liquidity, limiting demand for risk-sensitive currencies like the NZD. Additionally, concerns surrounding global trade tariffs and their impact on the commodity-exporting economies of Oceania have weighed on investor sentiment.
Technical Analysis
The GBP/NZD pair, trading on the 1-hour timeframe, has resumed its upward momentum following a brief consolidation phase. The bullish trend, which began on January 25, remains intact, with buyers challenging the upper boundary of the range at 2.20062.
If bullish pressure continues and GBP/NZD breaks above this resistance, the next upside targets stand at 2.20263, 2.20518, and 2.20800, aligning with previous swing highs. These levels could serve as potential turning points if buyers struggle to sustain momentum beyond key resistance.
Momentum oscillators reinforce the bullish bias, with the RSI holding in positive territory and the MACD confirming ongoing buying interest. Additionally, moving averages trend upward, supporting the continuation of the rally.
However, if sellers regain control, a break below 2.19780 could shift market dynamics, bringing the 2.19324 support level into focus. A decisive break below this level would invalidate the bullish scenario, potentially triggering a deeper pullback.
Key Technical Levels
- Resistance Levels: 2.20062, 2.20263, 2.20518, 2.20800
- Support Levels: 2.19780, 2.19324
Fundamental Factors
Markets remain focused on the broader macroeconomic landscape, particularly the impact of trade tariffs on global commerce and currency valuations. The potential disruptions in international trade could weigh on the NZD, given New Zealand’s reliance on export-driven growth.
Additionally, the upcoming central bank meetings from the Federal Reserve (Fed), European Central Bank (ECB), and Bank of Canada (BoC) may influence the pace of global interest rate adjustments. Any signals regarding faster or slower rate cuts could impact risk sentiment and currency flows.
In New Zealand, traders are closely monitoring the trade balance report, which is set for release tonight (EET time). Market expectations suggest that New Zealand’s trade deficit may have tripled in December, which could further weaken the NZD in the short term.
Conclusion
GBP/NZD remains bullish, with technical and fundamental factors aligning in favor of buyers. A break above 2.20062 would confirm further upside, while a failure at resistance could lead to short-term retracements. The New Zealand trade balance report and broader market sentiment on global trade risks will be key drivers for the next move.
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