Introduction to Currency Market
The currency market is always full of excitement, and this week is no exception. On Monday, the British pound (GBP) and the New Zealand dollar (NZD) were trading flat, as investors waited with bated breath for a busy week of central bank meetings.
Central Bank Meetings
The spotlight is now on the U.S. Federal Reserve, which will be setting its policy this week. Other central banks, including those in Japan and Canada, will also be meeting to discuss their monetary policies. However, the main event for GBP/NZD traders will be the Bank of England’s policy meeting on Thursday. The Bank of England is widely expected to leave interest rates unchanged, as it tries to tackle stubborn inflation.
Fiscal Risks and Budget
Beyond monetary policy, traders are also keeping an eye on fiscal risks. The UK is heading towards its autumn budget on November 26, which could have a significant impact on the value of the pound. The budget could shape sentiment around sterling and influence the direction of the GBP/NZD currency pair.
Technical Analysis
For traders, the immediate resistance level is 2.0453, which is the high point reached on September 15th. If the pair closes above this level, it could push towards 2.0584, which is the 50% Fibonacci level. On the other hand, support is seen at 2.0358, which is the 38.2% Fibonacci level. If the pair breaks below this level, it could fall towards 2.0287, which is the lower Bollinger Band.
Trading Recommendation
Given the uncertainty surrounding the central bank meetings and the autumn budget, the best approach for traders may be to remain sidelined. This means avoiding taking any major positions until the dust settles and the market direction becomes clearer.
Conclusion
In conclusion, this week is shaping up to be an exciting one for currency traders, with central bank meetings and fiscal risks dominating the headlines. While the Bank of England is expected to leave interest rates unchanged, the autumn budget could still have a significant impact on the value of the pound. Traders would do well to remain cautious and wait for the market to provide clearer direction before making any major moves.
