Trade of the Day: GBPNZD Grind Lower
Trade of the Day: GBP August retail sales data were better than expected and July was revised sharply higher to +1.9% m/m (+1.4%). In August retail sales fell 0.2% m/m but rose 6.2% y/y. Despite the August data, the trend in sales remains up and the 3m/3m volume of sales rose by 1.6%. The data confirms little dislocation before, during, or after the EU referendum by consumers. The MPC voted 9-0 to leave policy unchanged but still keeps its easing bias “if the August outlook is confirmed”. Virtually every piece of data since the August inflation report and policy easing has contradicted the forecast of a near term slowing in the economy. The MPC is hedging its bets by qualifying its forward guidance. NZD next week, volatility is expected to pick up in a big way with the Fed and RBNZ decisions due, along with a BOJ decision that could also impact the risk correlated New Zealand Dollar.
Trade Idea: I am monitoring price action in GBPNZD as price appears to be mapping a bearish descending triangle pattern yesterday’s bearish reversal candle threatens a move to test the lower end of the triangle range and possibly break lower to target symmetry support sited at 1.7263, as such I am place a sell stop order below yesterdays low with a protective stop above today’s high.