Pound-New Zealand Dollar could face further pressure if the RBNZ raises rates, while cautious BoE signals may leave Sterling vulnerable.
The Pound New Zealand Dollar (GBP/NZD) exchange rate was volatile last week, with the pairing eventually sliding to a 12-week low.
At the time of writing, GBP/NZD traded at NZ$2.2824, virtually unchanged on the week.
DAILY RECAP:
The Pound (GBP) attracted some support on Monday after an analysis from the Resolution Foundation thinktank suggested that UK productivity may have improved in recent years, rather than weakening.
Sterling then fluctuated, as a lack of data left it exposed to volatility.
After GBP/NZD touched a five-day high midweek, the Pound then retreated. The Confederation of British Industry’s (CBI) latest distributive trades survey came in worse than expected, while rising energy bills raised cost-of-living concerns.
With UK data thin through the latter part of the week, Sterling moved without a clear direction.
Meanwhile, the New Zealand Dollar (NZD) stumbled at the start of the week after New Zealand reported a surprise contraction in retail sales in the second quarter.
The risk-sensitive ‘Kiwi’ faced further pressure as the week went on, with a risk-off mood and domestic political uncertainty both pressuring the currency.
However, an improving market mood helped the New Zealand Dollar regain ground through the second half of the week.
Near-Term GBP/NZD Forecast: RBNZ Rate Hike to Lift the ‘Kiwi’?
Looking ahead, the focus for NZD investors this week will be the Reserve Bank of New Zealand’s (RBNZ) interest rate decision during Wednesday’s Asian trading session. A rate hike from the central bank could boost the ‘Kiwi’.
The New Zealand Dollar could then trim its gains on Thursday night, if the latest ANZ consumer confidence index shows a deterioration in morale in August.
As for the Pound, the UK’s final services PMI could influence Sterling on Thursday. If it confirms an improvement in activity in August, the British currency could climb.
A speech from Bank of England (BoE) Governor Andrew Bailey could then affect GBP on Friday, with the Pound potentially struggling if the BoE chief remains cautious about the need for further rate hikes.
Our currency coverage draws on live market data, official economic releases and published bank research.
