Never miss a story from David Song

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

FX TALKING POINTS:

- GBP/USD Preserves Bearish Sequence as U.K. Retail Sales Narrows in March. Bank of England (BoE) Rhetoric in Focus.

- NZD/USD Eyes Monthly-Low (0.7195) as New Zealand Consumer Price Index (CPI) Slows. Relative Strength Index (RSI) Flashes Bearish Signal.

DailyFX Table

GBP/USD PRESERVES BEARISH SEQUENCE AS U.K. RETAIL SALES NARROWS IN MARCH. BANK OF ENGLAND (BOE) RHETORIC IN FOCUS.

GBPUSD Table

GBP/USD slipped to a fresh weekly low (1.4161) as updates to the U.K. Retail Sales report showed a 0.5% decline in March, and the pair remains at risk of facing a larger pullback as it extends the series of lower highs & lows from earlier this week.

The recent batch of lackluster data print should keep the Bank of England (BoE) on the sidelines at the next meeting on May 10 as ‘the steady absorption of slack has reduced the degree to which it is appropriate for the MPC to accommodate an extended period of inflation above the target,’ and fresh comments from board members Jon Cunliffe and Michael Saunders may keep the British Pound under pressure if the officials largely endorse a wait-and-see for monetary policy.

However, a slew of hawkish comments may curb the recent weakness in GBP/USD as the Monetary Policy Committee (MPC) appears to be on courses to implement higher borrowing-costs over the coming months, and the central bank may increase its effort prepare U.K. households and businesses for another rate-hike as ‘an ongoing tightening of monetary policy over the forecast period will be appropriate to return inflation sustainably to its target at a more conventional horizon.

With that said, the broader outlook for GBP/USD remains constructive as both price and the Relative Strength Index (RSI) largely track the bullish trends carried over from the previous year, and the broader shift in pound-dollar behavior may continue to unfold in 2018 as the BoE alters the path for monetary policy.

For more in-depth analysis, check out the Q2 Forecast for GBP/USD

GBP/USD DAILY CHART

GBPUSD Daily Chart
  • Near-term outlook for GBP/USD remains capped by the Fibonacci overlap around 1.4310 (61.8% expansion) to 1.4350 (78.6% retracement), with the pair at risk for a larger pullback as it extends the bearish sequence from earlier this week.
  • The 1.4100 (100% expansion) handle remains on the radar, with a break/close below the stated level opening up the next region of interest around 1.3970 (50% expansion), which lines up with the April low (1.3965).

NZD/USD EYES MONTHLY-LOW (0.7195) AS NEW ZEALAND CONSUMER PRICE INDEX (CPI) SLOWS. RELATIVE STRENGTH INDEX (RSI) FLASHES BEARISH SIGNAL.

NZDUSD Table

NZD/USD remains under pressure as New Zealand’s Consumer Price Index (CPI) slows to an annualized 1.1.% from 1.6% in the fourth-quarter of 2017, and the pair may continue to give back the advance from the April-low (0.7195) as the bullish momentum appears to be abating.

The second consecutive decline in the headline reading for inflation is likely to discourage bets for higher interest rates even as Governor Adrian Orr takes the helm, and the Reserve Bank of New Zealand (RBNZ) may retain the record-low cash rate throughout 2018 amid the ongoing reforms at the central bank.

With that said, Governor Orr may merely stick to the current script at his first rate decision on May 10, with the New Zealand dollar at risk of facing as larger correction over the near-term as the Relative Strength Index (RSI) flashes a bearish signal.

NZD/USD DAILY CHART

NZDUSD Daily Chart
  • NZD/USD continues to carve a bearish sequence following the failed attempt to hold/close above the 0.7330 (38.2% retracement) to 0.7370 (23.6% retracement), with the pair at risk for further losses as the RSI snaps the upward trend from March.
  • The Fibonacci overlap around 0.7240 (61.8% retracement) to 0.7260 (38.2% retracement) sits on the radar, with a break/close below the stated region raising the risk for a move back towards 0.7170 (50% retracement) to 0.7200 (38.2% retracement), which lines up with the monthly-low (0.7195).

New to the currency market? Want a better understanding of the different approaches for trading? Start by downloading and reviewing the FREE DailyFX Beginners guide!

Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

DailyFX Calendar

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.