Mark McCormick, Global Head of FX Strategy at TD Securities, suggests to go long on GBP/NZD cross at current levels, targeting a move to 1.90 and a stop of 1.8445.
Key Quotes
“While all the G10 shows downside growth momentum, the USD, for its part, falls into the worst quadrant that shows dual deceleration. Even so, NZD takes top shop in terms of the overall worst ranking and GRMI doesn’t help its ranking this week. We also expect a weak NZ CPI print that could catalyze NZD downside.”
“For GBP, while it has plenty of Brexit risks to manage, we note this week’s event calendar offers smoother sailing. Furthermore, GBP checks a few boxes in the desirable (tactical) contrarian trade column, reflecting its weight in these baskets. It is also trading with a 2% discount to HFFV against the USD. When we calculate the cross NZD HFFV levels, GBPNZD is trading at a whopping 5.3% discount!”
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