GBP/USD jumped on hottest CPI in 30 years, NZD/USD slide after RBNZ’s hawkish move
GBP/USD jumped after the UK reported its highest CPI reading in three decades. New Zealand’s central bank raised interest rates by 50bps, the biggest hike in 22 years.
The UK reported its highest CPI reading in three decades. By all measures, numbers are very strong with headline inflation coming out at 7% year-on-year, a big jump from what we saw in the previous month. PPI is pushing at 11.9% yearly, which is higher than the expected 11.1% and 10.1% in February. The Retail Price Index is also exceeding expectations to reach 9%.
Meanwhile, in the Southern Hemisphere, New Zealand’s central bank raised interest rates by 50bps, the biggest hike in 22 years. The hawkish move from Wellington consolidated the view in the global market that the inflation issue is much worse than anticipated and might be already out of control.
Since last October, the RBNZ raised the cash rate for four consecutive policy meetings by 125 basis points while yet to stop the growth of inflation as it reaches a 32-year high.
Earlier this week, the GBP/USD plummeted down to the floor level of the year with the daily low breaching the 1.3000 psychological thresholds for four straight days. Boosted by the sizzling CPI reading and the possibility of a higher interest rate, the pair moved up 0.8% after the report.
At this point, level 1.3014 has demonstrated strong support for the pair. Moreover, RSI indicates that bull-buyers are helping the pair leave the oversold territory. Resistance can be sought from the week-long trend line formed in March, at around 1.3098. and if they break this level, the pair is ready to move toward the month high point. That being said, the recent strength of the greenback may put pressure onto the floor, opening a new low.
NZD/USD has been climbing since mid-March despite the recent strength of the greenback. Based on the weekly chart, the trend line connected by the lows and highs will see the Kiwi’s currency pushing towards the end of the triangle shape, which, if broken through, would turn the lower boundary to be the future pressure.
Current support can be found from the 50-day moving average in the daily chart, while the next support of 0.6819 is not far away. Should the price manage to regain its strength, the imminent challenge will look at the 20-day moving average, around 0.6921.
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