GBPNZD is consolidating inside a symmetrical triangle on its short-term time frames, and the tighter price action is suggesting that a breakout is due soon.
Technical indicators are giving mixed signals when it comes to direction, as most are reflecting sideways price action. The pair is trading above both the 100 SMA and 200 SMA, so this might be an early bullish signal.
A break above the triangle top around 1.9350 could set off a rally that’s the same size as the triangle or around 400 pips. Similarly a break below support at 1.9300 could be followed by a selloff that’s of the same height.
Stochastic is still pointing down to show that sellers have the upper hand, and the oscillator has room to slide before reflecting oversold conditions. Meanwhile, RSI is moving sideways to reflect consolidation as well.
Earlier this week, the RBNZ hiked interest rates by 0.75% to signal that the central bank is taking aggressive tightening measures to ward off inflation. However, retail sales data suggests that spending may be subdued, so policymakers might soon dial down their pace of rate hikes.
Meanwhile, PMI data from the UK turned out stronger than expected, easing fears of another economic contraction in the economy. This could also give the BOE breathing room for more interest rate hikes without worrying about derailing growth.
Note that the UK printed record-high inflation figures for October, which means that BOE officials need to step up their efforts in terms of keeping price pressures in check. Analysts are projecting weaker spending trends during the holiday season due to lower spending power among households.
Low liquidity during the Thanksgiving holidays could pave the way for more volatile price action on headlines or major shifts in market sentiment.