• GBP/NZD advanced on Thursday as Kiwi tumbled following after weak New Zealand GDP data fueled speculation of aggressive rate cuts.
• The economy shrank more than expected in Q2, with construction in retreat and global uncertainty mounting, heightening expectations the RBNZ may opt for a sharper rate cut in October.
• Official data on Thursday showed New Zealand’s GDP contracted 0.9% in Q2, far steeper than the 0.3% decline forecast by both analysts and the RBNZ.
• Following the GDP data, traders priced in 58 bps of OCR easing, compared with 48 bps earlier, along with a 20% probability of a 50 bps October cut.
• Technicals are favoring bullish sentiment as RSI is at 62 and the pair is trading above 11,14 & 21-DMAs.
• Immediate resistance is located at 2.3155(Higher BB), any close above will push the pair towards 2.3217(23.6%fib)
• Strong support is seen at 2.3023(38.2% fib)and break below could take the pair towards 2.2867(50% fib).
Recommendation: Good to buy around 2.3000 with stop loss of 2.2900 and target price of 2.3100
