The pound got a boost today as the UK produced some of the best employment results it had seen in a long time and the unemployment rate fell to 4.9%, an abnormally low figure for a developed western country. This was jump was lead in part by a jump of 0.4K in claimant counts and this might also be a case of people holding on to their jobs in the previous quarter before the Brexit in case of uncertainty. The pound is also being helped by the fact that the UK government seems now much more stable than it was in previous weeks where both parties looked to be leaderless and the opposition to Brexit was also resigning left front and centre leading to further issues. For now though the pound has looked to stabilise and the large volatile movements we have previously seen have stopped and this has been in part to the logical move from the BoE to hold fire on interest rates, in turn helping to further boost the pound.
The GBPUSD has jumped higher as a result of today’s fundamental results, but from a technical perspective it has been very interesting on the daily chart when it comes to the 14 day moving average which has so far acted as dynamic support every time the market has looked to move lower. While we have seen lower lows, time and time again the 14 day moving average has blocked it breaking out any lower. With that in mind I still resistance at 1.3340 as a ceiling against any further large movements higher and support at 1.2795 being the long term expectation for market traders as a target to aim for.
The New Zealand dollar has been doing the rounds on the ticker tape as the Reserve Bank of New Zealand put out a statement on the economy which has drive the NZDUSD lower. The statement issued pointed at the high NZDUSD as being unsustainable and the fact that further monetary easing would be required in order to help better support the economy, which has been struggling with the global uncertainty as well as the abnormally high NZD. Many are now expecting a rate cut at the upcoming August OCR statement of 25 basis points to 1.75%, this would be now possible given the recent housing adjustments that the RBNZ has implemented on the market.
The technical’s have been very strong with the NZDUSD as usual as it has slipped down the market rapidly in the wake of all the news. Right now the NZDUSD is stuck on support at 0.6916, but this is unlikely to hold in the near term and I anticipate we will see further falls in the short term in the lead up to the likely hood of future rate cuts. Traders will be looking for support targets at 0.6881 and 0.6760 as likely candidates for the market to take breathers on the way down.