GBP/NZD – Gunning for 1.8000?

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This morning’s UK inflation report was hot, fueling expectations for more hawkishness from the Bank of England. The UK government could trigger Article 50 any day now, but until they do, rate hike expectations could drive GBP to 1.25. UK CPI printed at 2.3% versus 2.1% eyed while core reading rose to the key 2.0% level from 1.8% forecast. The core reading is now above the BoE’s target rate and was the real reason for the pound rally, as currency markets begin to price in the possibility of a rate hike.

The New Zealand dollar, on the other hand, could come under selling pressure on the back of the RBNZ rate decision. Since their last meeting in February, consumer spending has fallen, GDP growth slowed, the trade deficit widened while dairy prices declined. There was some strength in the services and manufacturing sectors but with the currency so strong, we don’t think that will be enough to ease the central bank’s concerns.

Therefore GBP/NZD has scope to rise further. The pair has no significant resistance until 1.7800-1.8000 corridor while support comes in at 1.7400

GBP/AUD – 1.8000 in view?

GBP/AUD – 1.8000 in view?

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Fundamentals

The latest BoE inflation report brought bad news to pound bulls as the UK central bank lowered its inflation forecast and essentially confirmed that they are no even thinking about rising rates until H2 of 2015. That posture is likely to continue to weigh on cable as investors and speculators have no need to get long the unit for either growth or income possibilities. In Australia on the other hand the prospect of any further rate cuts appears remote and that makes the Aussie a good place to park money while the global growth situation gets resolved. Little wonder then that GBP/AUD has been under massive liquidation attack for the past few days and may see even lower prices if today’s Chinese data proves tp be in line or better assuaging any fears of further slowdown in the Middle Kingdom. Under those conditions the pair could see 1.8000 before end of the week.

Technicals

GBP/AUD has now made a triple top at the 1.8600 level and the distribution is facing a triple bottom at the 1.8100 level. A break there opens a runt to 1.8000 and only a close above 1.8300 relieves the downside pressure on the pair.

GBP/CAD – Heading to 1.8000?

GBP/CAD – Heading to 1.8000?

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Fundamentals

The topsy turvy price action in USD/CAD on Friday was the result of the geopolitical shock from the possible prospect of more fighting in Ukraine. But assuming the tensions do not boil over int a full blown war the news from Russia is likely to have little long term impact on the pair. Meanwhile the revised labor data from Canada that hit earlier in the day showed a much more positive picture with job increasing by twice the originally expected amount to 40K. That means that the Canadian economy is finally benefiting from the broader North American recovery and should help boost the loonie. On the other hand cable continues to suffer as interest expectations from UK begin to shift further out. Next week brings UK CPI data and if it remains cool it will only provide further reason to push cable lower which means that GBP/CAD could target 1.8000 barrier.

Technicals

GBP/CAD is now nearing the bottom of its recent range and a move through 1.8100 would put 1.8000 squarely in view. On the upside only a move through 1.8400 relieves downside bias.