• GBP/NZD initially gained but surrendered most of its intraday gains as traders digested the RBNZ’s surprise rate decision.
• The Reserve Bank of New Zealand shocked markets on Wednesday with a 50 bps rate cut, warning of economic weakness and leaving the door open to more easing.
• The RBNZ’s decision defied expectations, as 15 of 26 economists in a poll had predicted a smaller 25-basis-point cash rate cut.
• The central bank has trimmed rates by 300 bps since August 2024, and stable inflation between 1% and 3% gives room for further easing.
• New Zealand is among the few countries cutting rates as inflation eases, but its aggressive rate cut stand in contrast to the more cautious approach of the U.S. Federal Reserve and the Reserve Bank of Australia.
• Immediate resistance is located at 2.3353 (Higher BB), any close above will push the pair towards 2.3392 (23.6%fib).
• Strong support is seen at 2.3068 (38.2% fib) and break below could take the pair towards 2.2988 (SMA 20).
Recommendation: Good to buy around 2.3170, with stop loss of 2.3100 and target price of 2.3260
