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A clean, textbook Fib and consolidation setup against a few upcoming top tier events makes GBP/NZD definitely one to watch for the next session or two.

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • FOMC Meeting Minutes at 7:00 pm GMT
  • Australian Employment Update at 12:30 am GMT (Feb. 21)
  • Japan Manufacturing PMI at 12:30 am GMT (Feb. 21)
  • German CPI at 7:00 am GMT (Feb. 21)
  • Europe Manufacturing & Services PMI at 9:00 am GMT (Feb. 21)

What to Watch: GBP/NZD

GBP/NZD 1-Hour Forex Chart
GBP/NZD 1-Hour Forex Chart

Today we’ve got a clean Fibonacci setup on GBP/NZD that’s worth checking out for the session. The paired has bounce higher after a swing move from around 1.9250 down to just under the 1.8700 handle, now testing (and holding) between the 50% – 61% Fib area. This also lines up with the major psychological level of 1.9000, so odds are good a lot of traders are watching to see what the pair does next after it’s is done consolidating.

Fundamentally, there’s fresh pressure on the pound as U.K. political issues rise with more MPs quit Theresa May’s party today, and we’ve got the FOMC monetary policy meeting later in the U.S. session, that could spark risk-on sentiment buying if they hint at ending balance sheet normalization this year and/or there’s solid rhetoric of no further rate hikes.

Currently, the odds look better than even that this consolidation on GBP/NZD will be followed by a move back into the longer-term downtrend, which does have a very nice potential return-on-risk if placing stop just above the consolidation/Fibs and targeting recent swing lows. If it does move lower, flipping this position into a longer-term swing trade makes sense for a bigger potential return with proper risk management.

A bull case on GBP/NZD could be made, though, in the upcoming Asia session if Australian jobs data disappoints big time; it’s likely Aussie weakness will drag down the Kiwi with it in the very short-term, as well as possibly drag on global risk sentiment. An upside break of consolidation could lead to a move to the recent swing higher around 1.9250, which is well within GBP/NZD’s daily ATR and a solid potential R:R as well.