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Stopped out on a pullback! I do wish I had been able to stay longer in this short trade, but the positive developments in the U.K. led me to doubt that the selloff could continue.

Short GBP/NZD Trade

In my previous update, I mentioned that I rolled my stop just slightly below breakeven to lock in a few pips in case the pair pops higher on strong U.K. data.

Earlier in the week, the U.K. reported higher than expected CPI readings which might prompt the BOE to take a more hawkish view in their upcoming policy decision. As always, BOE member Forbes could vote for a rate hike, although there seem to be slim chances of another policymaker joining her.

GBP/NZD 1-hour Forex Chart
GBP/NZD 1-hour Forex Chart

At the same time, news that a coalition has been struck between the Conservatives in parliament and the DUP has also provided some relief for the pound. This led GBP/NZD to move slightly past the mid-channel area of interest and hit my adjusted stop loss at 1.7675 in the process.

I’m still maintaining my bullish bias on the Kiwi and my bearish bias on the pound, though, especially from the longer-term standpoint. However, I’m inclined to sit on my hands for now while waiting for the New Zealand Q1 GDP to be released and the BOE MPC minutes to come out.

From there, I’m planning on reestablishing a short position, probably around the top of the descending channel in case the pair makes a bigger correction from the drop or on a break of support at the 1.7500 mark.

For now, here’s what I ended up with:

P/L: +20 pips / +0.02%

I know, I know… I could’ve made more gains had I not moved my stop at all since price is back down to the bottom of the channel. However, I still think it’s a good risk management decision, knowing that the bullish reaction to the CPI or political headlines could’ve been much larger and might’ve even resulted to a loss on this position.

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