It's been one of those trading days today where you can't escape the Brexit and all its fall out as it continues to dominates news feeds globally - especially when it comes to the trading world. The UK economy continues to feel the heat globally as once again no is quite sure of the direction the market is taking, but at present it looks to be so far a positive view as the UK polls are showing a slight lean to the remain side. After the 23rd little will matter when it comes to the Brexit if Britain votes to remain, but the deciding factor will be if markets think this is a one off in the long run. Certainly it does not feel to be the case and the recent rejection of resistance is something to go off for traders looking for confidence.
On the charts the rejection of 1.4774 should not be a surprise given that the economic climate has so far been very volatile. The market continues to feel a number of polls, all of which paint very different pictures and the recent UK elections add doubt to the polls over all as to the impact they will likely have. Regardless from the current position the GBPUSD could easily fall to support levels at 1.4446, and this could easily be achieved on the 23rd given the volatility of the day. Certainly if we do see a drop, I can see support at 1.3961 being the optimal target for support traders in the short term, as markets will struggle to price the GBPUSD. Technical levels will also struggle in the long run, as an event like this throws the door wide open to horrific volatility with little to no repercussions for traders.
Overseas and the NZD continues to deft expectations as it plays off the back of a weaker USD. As usual the NZDUSD continues to come under pressure as the USD weakens and pushes it higher up the charts, this also comes on the back of recent comments from the finance minister who tried to talk down the value of the high flying kiwi. However, the jump in NZ migration data to +5500 will be noticed by the Reserve Bank of New Zealand which will put further pressure on the NZ housing market.
On the charts the NZDUSD has jumped higher to 0.7163 and at this level the currency movements are unsustainable given the NZ economy is still struggling. Long term expectations are for a drop lower to 0.7046 and below support levels at 0.6961. The market will regardless be looking at the 20 day moving average which could provide support after the effects of the Brexit vote in the short term. Either way the NZDUSD continues to find itself over bought at present and a correction is most certainly on the cards.
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