GBPNZD Correction Setup (Sep 01, 2017)

Price is currently testing the channel resistance around the 1.8000 major psychological handle and could be due for a dip to support near 1.7600. Stochastic is turning down from the overbought zone to show a pickup in selling pressure. 

Applying the Fibonacci retracement tool shows that the 50% level lines up with the mid-channel area of interest and a former resistance level. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside, which means that the uptrend is more likely to resume than to reverse. 

Brexit worries could keep a lid on the pound's gains for some time as the EU lead negotiator said that they haven't started on trade talks and that they haven't made much progress on the issues being discussed. This could mean more uncertainty for businesses, which could dampen economic confidence and activity. 

MPC member Saunders did drop some hawkish remarks during his latest speech but traders picked up on a slightly less upbeat tone. UK manufacturing PMI is due today and a dip from 55.1 to 55.0 is expected, indicating a bit of a slowdown in industry expansion.

Meanwhile, the Kiwi is also being tossed around by market sentiment and profit-taking. New Zealand is set to print its quarterly overseas trade index, likely reporting a 3.2% gain versus the earlier 5.1% increase. 

By Kate Curtis from Trader's Way