Asian session trading was dominated by the pound falling across the board.
Can GBP/NZD recover to last week’s levels?
Before moving on, ICYMI, I’ve listed the potential economic catalysts that you need to watch out for this week. Check them out before you place your first trades today!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Sterling plunges to all-time low in scathing appraisal of fiscal planPBOC raises forex risk reserve ratio for forward trading
Jibun Bank Japan manufacturing down from 51.5 to 51.0, services PMI up to a three-month high of 51.9 in Sept
Japanese Finance Minister Shunichi Suzuki: we are “deeply concerned about recent rapid and one-sided market moves”
UK Rightmove house prices up by 0.7% in Sept vs. 1.3% decline in Aug
Asian equity markets plunged on recession fears
Oil prices fall for a second day on concerns about expected recession
German business sentiment slumps from 88.4 to 84.3, the lowest level since May 2020
Upcoming Potential Catalysts on the Forex Economic Calendar:
ECB’s Lagarde to testify in Brussels at 1:00 pm GMT
FOMC member Mester to talk economic outlook at 8:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/NZD
In case you missed it, the British pound (GBP) currency strength weakened even further from last Friday when U.K. Chancellor of the Exchequer Kwasi Kwarteng announced a “mini budget plan” that included basic income tax cuts.
While it would provide extra income for consumers, it would also likely fuel inflation and undo some of the impacts of the Bank of England’s (BOE) interest rate hikes.GBP continued to fall across the board. GBP/NZD, in particular, fell all the way to the 1.8200 zone before it found enough buyers.
Will GBP/NZD go back to its 1.8200 lows?
GBP is now trading closer to 1.8800, which lines up with a major support area from earlier this year and the 50% Fibonacci retracement of the previous days’ selloffs.
Market sentiment probably won’t change either.
Unless we hear new updates, GBP bears can keep pricing in the inflationary effect of the U.K.’s tax cuts while China (one of New Zealand’s largest trading partners) and other Asian countries reopen their economies.
GBP/NZD could revisit its monthly lows or even make new lows before September ends.
What do you think?