The Pound has already dipped slightly against the New Zealand Dollar this week, and the future could hold more dramatic losses for GBP NZD.
Last week, the interbank Pound to New Zealand Dollar exchange rate gradually declined by 3 cents, starting at a high of 1.79 on Monday before dropping to a low of 1.76 by the weekend.
UK-EU Relationship in Focus
Monday’s European trading session has been largely devoid of major UK economic news, with the rest of the week set to bring a more plentiful supply of impactful announcements.
The key event of last week was the Supreme Court hearing of the Government’s case for triggering Article 50. While judges are officially neutral on the two different viewpoints in the case, the general opinion was that the Government had not convinced lawmakers that it should be the sole decider on when Article 50 is triggered.
This raised demand for the Pound, as has the latest news concerning the UK’s future relationship with the EU.
While still in the earliest of stages, the plans for allowing EU citizens to remain in the UK (and vice versa on the continent) appear to have gone down well among investors, which has kept the Pound afloat against most peers, barring the New Zealand Dollar.
New Zealand Dollar Climbs as New PM English Takes Office
Demand for the New Zealand Dollar was high on Monday owing to the appointment of the new NZ Prime Minister.
Taking over from the departing John Key, who resigned at the start of December, Bill English has adopted a tone of unification and prosperity, though analysts have stated that English may have difficulties filling the shoes of the popular Key.
Some have even estimated that with English at the helm, his National Party may struggle in 2017’s election, which points to greater NZ instability further down the road.
GBP/NZD Exchange Rate Forecast
This week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of UK inflation and earnings data, as well as unemployment stats and Thursday’s last Bank of England (BoE) interest rate decision of the year.
UK inflation is expected to rise on Tuesday, although Wednesday’s predicted slowdown in annual wages may cause the Pound to drop. This is due to fears of building inflationary pressure, as rising inflation needs to be met with rising incomes in order to prevent difficulties among low-income households.
Also out on Wednesday is October’s unemployment rate, which has a concerning rise forecast from 4.8% to 4.9%.
The last major UK news will be Thursday’s Bank of England (BoE) interest rate decision, which is expected to see another rate freeze at 0.25%. While upbeat commentary from the BoE could lend the Pound support, any dovish remarks may push GBP NZD lower.
In terms of news from New Zealand, Monday night is set to bring a manufacturing production rise while Wednesday night has a slight increase forecast for the November business PMI figure. Both results would be modestly NZD supportive.