The macro-economic newsflow over the coming days is likely to favour the New Zealand dollar, rather than the British pound, potentially prompting a return of favour to the beaten-down Kiwi counter.

Today (13 Jun) sees the release of May's Business NZ Manufacturing Index which has stayed in positive territory and above 50 since December 2012. Quarterly manufacturing sales in New Zealand edged back into positive territory on Sunday night (9 Jun) pointing to a potentially reassuring manufacturing index print.

The antipodean counter’s reaction to poor or indifferent Chinese data can sometimes be disproportionate and this appears to have been the case in the past month. Yesterday’s (12 Jun) Reserve Bank of New Zealand (RBNZ) meeting, which took place after Shares had gone to press, was unlikely to have contained any surprises with the RBNZ having kept the official rate at 2.5% since January 2011’s 50 basis-point cut.

Likewise, the Bank of England minutes of last week’s (6 Jun) Monetary Policy Meeting, to be published on Wednesday (19 Jun), are unlikely to contain any fresh news to give sterling an unexpected bid.

KEY LEVELS: The recent sharp surge in the GBP/NZD (+11.97% over 42 days) may now begin to break down as the pair reaches the 423.6% extension level (1.9817) off a low of 1.7699 (11 Apr). The pair is coming off its peak oversold level of 76 on the relative strength index (RSI), which is likely to result in a move lower to its previous area of resistance, located at the 1.9641 - 1.9380 level.

For those who are perhaps looking to jump on the uptrend, the breaking of the previous trend line (see chart) on 3 June could provide a decent area for a stop-loss. However, given the technical overbuying of this pair and the rate at which it has pushed higher, a short-term down-trend is more than likely.