Pound New Zealand Dollar Exchange Rate Bolstered by Bearish Trade

The Pound New Zealand Dollar (GBP/NZD) exchange rate trended broadly higher last week, as a gloomy market mood dampened the appeal of the ‘Kiwi’. 

What’s Been Happening: New Zealand Dollar Undermined by Risk-Off Mood 

The Pound New Zealand Dollar exchange rate firmed through last week’s session as diminished risk appetite saw investors largely shun the ‘Kiwi’. 

This came amidst fears over China’s growth trajectory as well as concerns over the potential collapse of Evergrande, the country’s second largest property developer. 

The prevailing risk-off environment also saw NZD exchange rates tumble through the latter half of the week, in spite of New Zealand’s latest GDP figures surprising to the upside.  

Meanwhile, the Pound was supported by some positive data releases through the first half of last week, with domestic unemployment dropping to an 11-month low, whilst inflation soared to a nine-year high. 

However, Sterling’s gains were tempered somewhat in the second half of the week, amidst concerns over the economic impact of surging energy prices in the UK as well as a disappointing retail sales print

Three Things to Watch Out for This Week 

  1. BoE Rate Decision 

Top of the agenda this week will be the Bank of England’s (BoE) latest interest rate decision. No policy changes are expected this month, leading the focus to be on the BoE’s forward guidance. 

  1. UK PMI 

Also influencing GBP exchange rates will be the publication of the UK’s latest PMI figures. These are expected to report a slowing of private sector growth this month, potentially weakening Sterling. 

  1. NZ Trade Balance 

NZD investors will meanwhile be focused on the publication of New Zealand’s trade figures, which exert some pressure on the ‘Kiwi’ as the country’s trade deficit is forecast to have expanded in August. 

Pound New Zealand Dollar Forecast 

Looking ahead, the direction of the Pound New Zealand Dollar exchange rate this week is likely to be largely determined by the BoE. Will a hawkish outlook from the bank help Sterling to strengthen?