After dropping to a three-week low before the weekend, the Pound advanced against the New Zealand Dollar on Monday despite a negative forecast for the UK economic outlook.
The biggest Pound-support today has been talk of a trade deal being forged between the UK and US, with trade negotiators from both countries meeting in Washington this week.
A successful deal would provide the UK with at least one trading lifeline in the post-Brexit period.
There are a few caveats, however; the UK cannot officially sign any trade deals until it exits the EU, and an influx of US goods may create headaches for UK consumers and trading regulators.
Elsewhere, the International Monetary Fund (IMF) has downgraded its 2017 UK growth forecast to 1.7% from 2% due to Brexit concerns. The move appeared to have little impact on the Pound.
New Zealand Dollar Dips from Best Levels
The NZD losses follow a bout of profit taking after the Antipodean currency strengthened notably last week, taking the NZD USD exchange rate to its highest level in over two years.
The strong domestic currency may result in the services sector taking a hit from reduced tourist activity, while RBNZ officials could shift their attention to trying to weaken NZD if they consider it overvalued.
GBP/NZD Forecast: UK GDP and New Zealand Trade Data Ahead
This week, Pound/New Zealand Dollar exchange rate movement may follow a speech from a Bank of England (BoE) official and UK GDP figures.
BoE Chief Economist Andy Haldane will be delivering a lecture in London. While not explicitly about monetary policy, the event may still bring some chance comments from Haldane about future BoE actions.
Haldane surprised economists when he turned hawkish on monetary policy; any indication that he could vote for higher interest rates in the near term may trigger a GBP rally.
Meanwhile, initial estimates for UK Q2 GDP are forecast to show an improvement from 0.2% to 0.3% quarter-on-quarter. On an annual basis, GDP is believed to have slowed from 2% to 1.7%.
There aren’t many NZ economic announcements to be aware of this week, with the main report being Tuesday’s trade balance data. Predictions are that the trade surplus widened in June.
Such a result could push the New Zealand Dollar higher.