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Look for some GBP/NZD upside ahead of another move lower.
The pound to New Zealand dollar exchange rate (GBP/NZD) remains in a solid longer-term uptrend, but we're definitely in a phase of unwind as we approach the October-November crossover.
Gains in GBP/NZD extended to as high as 2.3524 on October 17, but like a lot of GBP-exchange rates, that proved a turning point.
It's been downhill for sterling since then, and the move lower in GBP/NZD accelerated on Monday when it gapped lower to 2.3064.
That gap lower was a reaction to a barrage of good news regarding China and U.S. trade relations released on the weekend.
U.S.-China trade negotiators in Malaysia agreed a framework that would allow Presidents Trump and Xi to strike a deal when they meet in South Korea, later this week.
U.S. Treasury Secretary Scott Bessent said the U.S. and China have agreed on "a very positive" framework ahead of the Trump-Xi meeting. China's official state news agency Xinhua said that the sides had reached a "basic consensus".
The Kiwi fell sharply in mid-October when the U.S. threatened to impose a fresh 100% import tariff on Chinese goods. This was in retaliation for China's stringent global controls on rare earth exports.
The NZ dollar is highly sensitive to China-related trade developments, and news that there is progress towards a deal naturally helps it recover.
This stacks pressure on GBP/NZD and a move to 2.2958 looks to be on the cards.
However, before this, we would not be surprised to see a relief rally in the coming days as the hefty selloff of the past week is unwound somewhat. Indeed, Monday sees a recovery from the lows reached when the week's trade commenced in New Zealand and Japan.
Tactically, those with payment requirements can lean into a little GBP/NZD upside but be wary that we need confirmation before suggesting the strength will endure. For now it's liable to be short lived and a cheery global market sentiment will surely benefit the NZD.