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Range-Bound Market Conditions Continue
Forex
Summary:
The British pound faces downside risks stemming from domestic growth and employment, which limit its upside potential. Meanwhile, the New Zealand dollar is supported by expectations of a rebound in domestic inflation.
Sell
CLOSEDGBPNZD
End Time
2.26456
Entry Price
2.22800
TP
2.27800
SL
2.28942 -0.00670 -0.29%
1344
Points
Loss
2.22800
TP
2.27800
CLOSING
2.26456
Entry Price
2.27800
SL
Fundamentals
In the UK, the latest quarterly reports and labor market data indicate sluggish economic growth and a loosening labor market. The Bank of England noted in its latest Monetary Policy Report that quarterly GDP growth has been weak, employment growth has been around zero, with signs of a "gradual loosening," all of which undermine the fundamental strength of the pound. Additionally, news of slowing wage growth and a decline in employment in the UK labor market has made the market more sensitive to potential dovish signals from the Bank of England.
On the other hand, in New Zealand, inflation and monetary policy trends have recently shown a "slow growth but still within the target range" pattern. The Reserve Bank of New Zealand decided last month to keep the Official Cash Rate at 3.25% and signaled that inflation may rise to the upper end of the target range in the short term, leaving room for monetary policy maneuvering. Meanwhile, the Q2 CPI rose moderately but remained below some expectations. Market views on when the RBNZ might adjust interest rates are gradually evolving, which may provide relative support for the New Zealand dollar.
Overall, the British pound is constrained by downside risks in domestic growth and employment, limiting its upside potential. In contrast, the New Zealand dollar is supported by expectations of a domestic inflation rebound.
Technical Analysis
The recent trend of GBP/NZD shows a clear range-bound pattern in the daily chart. There have been multiple consecutive attempts to break above the upper range resistance level of 2.2750, all of which have failed. In addition, yesterday's upward test of this resistance level was also unsuccessful, increasing short-term upward pressure and signaling a gradual weakening of bullish momentum.
At present, if today's closing candlestick is bearish, GBP/NZD may continue to retreat toward the lower range support level of 2.2200 in the short term. A strategy of selling at highs is recommended.
Trading Recommendations
Trading direction: Sell
Entry price: 2.2650
Target price: 2.2280
Stop loss: 2.2780
Valid Until: August 27, 2025, 23:00:00
Support: 2.2560/2.2293
Resistance: 2.2704/2.2750
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