FxWirePro: GBP/NZD downtrend loses steam, remains on bearish path

• GBP/NZD edged higher on Friday as sterling remained supported despite early local election results in the United Kingdom.

• British Prime Minister Keir Starmer pledged to remain in office and “deliver change” after his ruling Labour Party suffered heavy losses in local elections.

• Support for Keir Starmer’s Labour Party dropped sharply in areas reporting overnight, with results still coming in on Friday. Meanwhile, Reform UK, led by Nigel Farage, emerged as the main beneficiary, gaining more than 350 council seats across England.

• Investors have grown wary that if Keir Starmer were forced out, he could be replaced by a more left-leaning Labour Party leader, potentially leading to higher public borrowing and adding pressure on debt and currency markets.

• UK markets  have been jittery in the run-up to the local elections as some investors think the likely replacements for Starmer would move Labour leftwards and increase spending, adding to the pressure on government bonds.

• Immediate resistance is located at 2.955(50%fib), any close above will push the pair towards 2.3127(Higher BB).

• Immediate support is seen at 2.2817(Lower BB) and break below could take the pair towards 2.2705(38.2).

Recommendation: Good to sell around 2.2960 with stop loss of 2.3080  and target price of 2.2780