GBP/NZD fell slightly during the session on Thursday, as it ran into resistance around the 1.93 level. The area was support recently, and as such it looks like it should continue to be resistance as typical technical analysis dictates.
Ironically, the British pound has been doing very well against most currencies out there. Nonetheless, the New Zealand dollar appears to be even more favored at this point in time. Because of this, this isn't necessarily going to be an indictment on the British pound, rather an endorsement for the New Zealand dollar.
As people run away from all things European, the British pound will suffer peripheral damage from time to time as people try to get away from the continent, and the British banks that are so heavily involved. Looking at the New Zealand economy, although not ideal in a risk off type of environment, we also have the specter of central bank easing out there and this could provide a lift to commodities.
Continuation of the trend
One of the things that I like the most about shorting this pair at this area is that it is an obvious continuation of the trend. The area had been super supportive a couple different times in the past, and suggests to me that we could see lower prices in the near term.
In fact, a break of the Thursday lows would have me selling and aiming for at least 1.90, if not lower. I think that this trend although very strong has a long way to go based upon the steady and growing being attitude of it. Remember, although these are two very popular currencies, this particular currency pair isn't a major one. This means the markets are a little less liquid than some of the others, and this means that we get larger moves.
This is essentially going to measure who stronger against the dollar, the British pound or the New Zealand dollar? By watching all three markets, you can get a feel for which way this market should go overall. As things stand right now, it does look like we are going lower.