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GBP/NZD has recovered over recent days and still holds onto its long-term uptrend.
Like other GBP pairs, the pound to New Zealand dollar exchange rate (GBP/NZD) is softer on Monday, but softness is relatively shallow for the time being.
GBP/NZD touched a low of 2.2806 on October 29, from where it found a base and rallied, recording seven consecutive daily advances.
That rally has run out of steam, which is hardly surprising given the exchange rate market's natural tendency to mean-revert.
Friday's 2.3450 peak looks to have delivered a temporary and interim peak and some softer trading conditions are due from here, perhaps allowing the exchange rate to re-convene with the 21-day exponential moving average (EMA), currently at 2.3165.
Weakness should be relatively contained and we would look for an eventual renewal of buying interest to take us back to the 2025 high at 2.3520.
On paper, the NZD should be doing a lot better than it has this Monday: risk-sensitive assets are rallying as investors welcome signs the U.S. government shutdown could be resolved soon.
For instance, the Aussie dollar made hay in this sunshine, but curiously, the kiwi didn't. It speaks of the currency's chronic underperformance, which we think is linked to the domestic economy's inability to really get back to winning ways.
Nevertheless, the optimistic tone to proceedings, and the prospects of a market bull run into year end bode well for currencies that are sensitive to the global mood music.
Even if NZD fails to lift, it will surely be relatively well insulated under such a scenario.