The Pound to New Zealand Dollar exchange rate (GBP/NZD) has extended its previous decline through several major support layers but it is approaching another in the shape of a major multi-year trendline, which sits at about 1.7350, and is expected to halt more declines, at the very least temporarily.

Apart from this imminent layer of support, there is another sign the downtrend may be weakening, which is non-confirmation from the momentum indicator, the MACD, which has not corroborated the lows reached by the exchange rate.

There is insufficient evidence, however, that the mini-downtrend is about to reverse as price action itself has not made enough of a recovery, so we see a continuation lower as still on balance the most probable outcome.

We remain cautiously bearish, in line with our previous forecast in which we expected the pair to fall to 1.7400 if it broke below the 1.7523 lows.

And although it has not quite reached that low it has reached close to it in the 1.7440s, and will probably continue down to hit the target eventually.

Data Ahead for the New Zealand Dollar

The main data release in the second half of the week is Q1 GDP at 23.45 on Wednesday 14, which should help fill in the picture for the economy.

TD Securities are optimistic that the economy will have shown growth of 0.7% in Q1 from only 0.4% in the previous quarter – as does the consensus of analysts.

“We see strong consumption and construction offset by a slide in business investment (doesn’t appear to be properly seasonally adjusted) and a drag from net exports. Temporary factors that dampened Q1 means there is upside to our conservative forecast,” said TD.

The positive tenor of the forecast seems to support the outlook for the currency in the week ahead.

Other major data includes the Current Account, which is forecast to rise by 0.92bn in Q1, from -2.34bn previously.

Events, Data to Watch for the Pound

The most significant event for Sterling will be the minutes of the Bank of England (BOE) Rate meeting published just after the announcement has been made on Thursday at 12.00 BST.

These are likely to show a 7-1 voting split with Kirsten being the only dissenter again (it will be her last meeting).

Inflation rose more steeply than forecast in May, but this is unlikely to feed through into more hawkish rhetoric as, ““entirely” driven by the weaker currency. Demand indicators remain mixed, so there’s little evidence that this assessment will change,” according to analysts at TD Securities.

A more hawkish stance would propel the Pound higher, of course, but this unlikely to happen, especially given the lacklustre earnings data out this morning.

This showed that despite the unemployment sticking at a relatively low 4.6% UK average wages had slowed down more than expected in April to 1.7%, from 1.8% in the previous month. This was well below the 2.0% expected.