Boo yeah! GBP/NZD is finally gaining some bearish momentum thanks to the upbeat New Zealand GDP so I’m making some adjustments with my short forex position. In case you’re just tuning in, make sure you take a look at my initial trade idea first.
Earlier this week, the U.K. printed slightly stronger than expected jobs data, with the claimant count falling by 18K versus the projected 8.8K drop and the average earnings index improving from 1.9% to 2.1%. I must admit, I held my breath for a while back there and considered closing early, thinking that this pair would made an upside break from the falling wedge.
However, the wedge resistance and 61.8% Fib continued to hold as a ceiling, keeping price in consolidation ahead of the New Zealand GDP release. Fortunately, this turned out stronger than expected, as the economy grew 0.9% in Q4 2015, higher than the estimated 0.7% growth figure.
But the list of forex catalysts doesn’t end there! For today we’ve got the BOE monetary policy statement coming up and even though most forex junkies are expecting to hear more downbeat remarks, I don’t want to leave it all up to chance. I’ve decided to trail my stop just slightly below entry to lock in a 50-pip gain (+0.04%) while still giving the trade room to breathe.
Still, I’m hopeful that BOE Governor Carney would step up their dovish game and remind market participants that they’re unlikely to tighten anytime soon. I’m also counting on the pickup in risk appetite, which was spurred by a less hawkish FOMC statement, to keep the higher-yielding Kiwi supported.