Most traders might be out enjoying the Chinese New Year long weekend today, but there are still some U.K. releases worth watching.
I’m seeing a simple pullback setup on GBP/NZD that could still enjoy some volatility.
Before we talk setups, make sure you’ve read all about the headlines that dominated the U.S. and Asian sessions:
- Japan and China’s markets out on bank holidays
- U.S. initial jobless claims at 793K vs. 755K forecast, previous reading revised from 779K to 812K
- Fed official Harker: Does not see inflation surging past 2%
- BOE official Haldane predicts double-digit growth a year from now, after pandemic
- New Zealand Business NZ manufacturing index up from 48.3 to 57.5
- New Zealand food price index up 1.3% after earlier 0.1% uptick
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. preliminary GDP q/q at 7:00 am GMT
- U.K. manufacturing and industrial production at 7:00 am GMT
- Swiss CPI at 7:30 am GMT
What to Watch: GBP/NZD
This pair is sitting right on an area of interest that lines up with a short-term rising trend line and the 61.8% Fib.
Will buyers keep defending this level even with the U.K. GDP up for release?A small economic expansion of 0.5% is eyed for Q4, although there could be room for a downside surprise as leading indicators have shown several weak spots. Also note that the U.K. government implemented stricter lockdown measures during this period, which might’ve dampened growth.
Then again, with these gloomy expectations already weighing on pound traders’ minds, an upside surprise might have the potential to make stronger moves!
While the Kiwi is enjoying some support from mostly upbeat data in the Asian trading session, profit-taking could be swift since most traders in the region are out enjoying the Chinese New Year holidays.
In that case, GBP/NZD could recover to the swing high at 1.9230 or beyond. After all, Stochastic still has plenty of room to climb before indicating exhaustion among bulls.