FTSE 100
The GBPNZD was higher on Wednesday after the Reserve Bank of New Zealand kept interest rates on hold and talked of further easing. The pound was 0.40% higher versus the Kiwi after traders saw the bank moving towards negative rates. The pound was weak on a similar assessment of the Bank of England’s plans and this helped the currency rebound.
The bank decided to hold rates at 0.25% which was expected by analysts, but they warned of further damage to the economy with jobs losses and business closures. There have been expectations by traders that the bank will move to implement negative rates and this gave them what they needed to price-in lower rates.
The RBNZ kept its large scale asset purchase (LSAP) programme at NZ$100 billion but said that further stimulus may be needed over a long period and that it was prepared to use look at further programs and negative rates, saying:
“Members agreed that monetary policy will need to provide significant economic support for a long time to come to meet the inflation and employment remit, and promote financial stability”.
The latest developments have been positive for the pound but it is dealing with many risks, including negative rates, new lockdown restrictions and a crunch Brexit meeting in mid-October, so any move higher may be short-lived.
GBPNZD is trying to create a double bottom around the 1.9000 level. The pair is currently trading at 1.9250 which is a resistance level for further gains. The rally is not very strong but there is still a chance of a rally towards the 50-day moving average at 1.9600. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.
