- Sterling struggles in February, thanks to Article 50 negotiations
- Reserve Bank of New Zealand and markets remain cautious
Sterling struggles in February, thanks to Article 50 negotiations
The Sterling-New Zealand Dollar rate continued in its consolidation pattern throughout February and the beginning of March. Currently trading in the range of 1.70-1.75 since December 2016, it appears that the market is still waiting for direction on which way to go. The relatively good news for the Pound is that the downtrend which has been in play since September 2015 appears to have halted for now, but we are still waiting for clarity on the direction of the next move. The Pound appears to have support just below 1.70, so for now, placing stop loss orders for Sterling sellers at that point looks sensible, to protect against another swift Sterling decline.
Reserve Bank of New Zealand and markets remain cautious
The Pound weakened in February, although not significantly versus the NZD, due to the dovish sentiment from the Reserve Bank of New Zealand (RBNZ). Generally, UK data has been good since Brexit, but any continuity showing weakness in the UK job market, manufacturing output or Gross Domestic Product figures will have a much more serious effect than with previous readings, due to the heightened tensions surrounding Article 50.
For NZD Buyers
The triggering of Article 50 will likely have been priced in – it was announced by UK Prime Minister, Theresa May, many months ago, so the market has had time to adjust. Where this pair heads will rely on the news emerging once the Brexit negotiations begin. For those looking for upside on the Pound, 1.78 is a level of resistance, so if we get up to the high 1.70s, that should represent a good buying opportunity over the coming weeks.
For NZD Sellers
NZD sellers should target the current range low of 1.70 (also a 10 plus year low), but act quickly if the Pound begins to show further signs of recovery.
Article supplied by Halo Financial, March 2017