The Pound strengthened after the Bank of England left interest rates steady, but the vote for a rate hike by the bank’s chief economist came with a surprise that supported the probability for the next hike in the August meeting.
The MPC voted 6-3 to hold rates flat, but the fact that there were three dissenting votes cast in favour of a rate hike today was a bit more hawkish than what was expected
Tensions between the U.S. and China continue, as the two largest economies in the world faced a tit-for-tat over trade tariffs. Earlier this week, U.S. President Donald Trump threatened to impose tariffs on another $200 billion of Chinese goods. China could strike back at blue-chip firms including Caterpillar and Boeing who rely on China for revenue.
The dollar also eased following the release of soft U.S. manufacturing data to drop at 19.9, lower than expected 28.9
But demand for the dollar continued to be boosted after Federal Reserve Chairman Jerome Powell on Wednesday reiterated that the case for gradual rate hikes remains strong.
New Zealand GDP growth dropped by 0.1% compared to the previous two quarters, coming in at just 0.5%, lower than the previous reading of 0.6%
On the daily chart, as we expected, the pair had broken the ascending channel followed by bouncing from the descending trend from the high of 2017 and the key resistance of 111.1.
The price also broke the support of 110.05 to reach the next support 108.15, to then get back up again from this level to retest the level at 110.05.
As you can see on the chart, the price is moving according to Elliot waves. By forming the A & B waves, we are waiting for the next move down to hit the C level which is located at the support of 106 and also to meet the ascending trend from the low of 2016.
So, a bounce has started and on its way.
On the daily chart, as we expected before, the price had made its way up to targets at the resistance zone 1.0815-1.0865, boosted by a BAT harmonic pattern.
The price has already made its retracement as we expected it to.
Reaching the support zone and shaping the Gartley harmonic pattern, the price is supposed to continue its bullish movement up to the 1.1045 level after forming hammer & engulfing candles respectively.
As we expected before, the price has reached the key resistance level 1.334.
As we can see the price is located at very strong selling area according to a key resistance level, 78.6% Fibonacci, the upper level of the reversal wedge, forming the Gartley harmonic pattern, and overbought in RSI.
So, any bounce there will lead the price down to the support zone at 1.309-1.299.