Revolt of the colonies - why NZD will triumph over GBP
I am splitting the trade into 2 entries:
One right here at the current market price and a sell limit order at the high of 2.09000.
The balance of power between the former colony and its rulers will shift soon:
GBP view:
- UK inflation came in lower than expected today. This was also likely because.
1. many leading economic indicators were already hinting at this in advance
2. analysts have been wrong in their forecasts for UK CPI more often in the past.
- UK inflation will fall more than the market currently expects in the coming months.
-> Most (but not all) of the BOE's priced-in rate hikes will have to be priced out.
- Core inflation will remain sticky for now, but will also fall more sharply from Q4 2023 onwards
-> Instead of the lavishly priced-in rate hikes, the BOE will tend to cut rates from 2024 onwards
-> This will weigh on the GBP
- US PMIs were bad this week
- UK retail sales came in higher (as I forecasted) than the market expected this week, so I can't rule out a pullback in GBP
NZD View:
- Inflation data from New Zealand came in higher than expected
-> The RBNZ says it has ended its rate hike cycle, but it may be forced to raise rates again in October or November.
-> This will ultimately be decided by the NZ jobs data at the beginning of August.
One right here at the current market price and a sell limit order at the high of 2.09000.
The balance of power between the former colony and its rulers will shift soon:
GBP view:
- UK inflation came in lower than expected today. This was also likely because.
1. many leading economic indicators were already hinting at this in advance
2. analysts have been wrong in their forecasts for UK CPI more often in the past.
- UK inflation will fall more than the market currently expects in the coming months.
-> Most (but not all) of the BOE's priced-in rate hikes will have to be priced out.
- Core inflation will remain sticky for now, but will also fall more sharply from Q4 2023 onwards
-> Instead of the lavishly priced-in rate hikes, the BOE will tend to cut rates from 2024 onwards
-> This will weigh on the GBP
- US PMIs were bad this week
- UK retail sales came in higher (as I forecasted) than the market expected this week, so I can't rule out a pullback in GBP
NZD View:
- Inflation data from New Zealand came in higher than expected
-> The RBNZ says it has ended its rate hike cycle, but it may be forced to raise rates again in October or November.
-> This will ultimately be decided by the NZ jobs data at the beginning of August.
Trade active:
The second entry at 2.09000 was triggered, the trade is 200 pips in profit and develops nicely.
The BOE and NZ employment numbers will be big influential factors this week.
The BOE and NZ employment numbers will be big influential factors this week.
