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Fundamental and Technical Outlook: GBP/USD & NZD/USD

By Xinyang August 26, 2016
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Fundamental Outlook: GBP/USD & NZD/USD

During the Asia-Pacific session the main data released was CPI data from Japan. CPI missed estimates across the board with Tokyo CPI Ex Fresh Food & Energy y/y declining to 0.1%, its lowest reading since 2013. National CPI Ex Fresh Food & Energy y/y declined to 0.3% from a prior of 0.5% and below expectations of 0.4%, along with the BoJ's own measure of inflation declining to new fresh lows of 0.5% from expectations of remaining unchanged at 0.7%.

The main data release during today's London session was UK GDP which printed in line with expectations and unchanged from prior at 0.6% q/q and 2.2% y/y.

Coming up during today's New York session will be US GDP and comments from Fed's Yellen.

In today’s session we expect the strongest currency to be NZD which has continued to remain supported following the most recent comments from the RBNZ which downplayed the need for additional cuts.

The weakest currency is expected to be GBP as fundamentally GBP remains the weakest currency of all the majors, furthermore GBP's recent retracement provides better levels to sell from.

With market participants looking ahead to Fed Yellen's speech which will likely determine USD sentiment going forward, we will be looking for a short GBPUSD on a hawkish Yellen and a long NZDUSD on a dovish Yellen.

The GBPUSD pair is currently priced at 1.3200.

There are several levels including the current price level which can be considered for selling opportunities:

The price levels below could be used to sell from as price retraces into them:

1.3260, 1.3300, 1.3400

The price level below could be used to sell from as price breaks out below:

1.3160

The NZDUSD pair is currently priced at 0.7314.

There are several levels including the current price level which can be considered for buying opportunities:

The price levels below could be used to buy from as price retraces into them:

0.7300, 0.7250, 0.7200

The price level below could be used to buy from as price breaks out above:

0.7345

Source: Jarratt Davis

Technical Outlook (GBP/USD Daily Chart)

Indicators: Bearish (50 sma below 200 sma)

Price action: The price has broken down from a long-term bearish channel

Summary: I am expecting the price to pull back near to the critical resistance zone before resuming its downtrend.

Screen Shot 2016-08-26 at 9.14.06 PM

Technical Outlook (NZD/USD Weekly Chart)

Indicators: Bearish (50 sma below 200 sma)

Price action: Double bottom formation in place

Summary: I am expecting the price to move towards the critical resistance zone in the next few weeks.

Screen Shot 2016-08-26 at 9.17.14 PM

 

 

 

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By Xinyang August 26, 2016
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