GBP/NZD Weekly Forecast: Pound Boosted by BoE Rate Hike Signal

The Pound New Zealand Dollar exchange is strengthening so far this week as the Bank of England’s (BoE) interest rate hike expectations continue to support GBP exchange rates.

Meanwhile, souring market sentiment has dented the New Zealand Dollar since the start of this week’s session.

What’s Been Happening: Pound Jumps on BoE Interest Rate Hike Expectation

The GBP/NZD exchange rate fluctuated through last week.

The Pound came under pressure through the first half of the week as the mounting energy crisis and CO2 shortages disrupting food production threatened the UK’s economic output, in turn weighing on Sterling sentiment.

GBP exchange rates recovered sharply later in the week after the BoE signalled they would tighten monetary policy and hinted at an interest rate hike early next year.

Meanwhile, shifting market risk appetite has driven the risk-sensitive New Zealand Dollar amid a lack of significant NZ economic data. The potential of Chinese property giant Evergrande collapsing and sparking an equity market selloff left some investors jittery.

Three Things to Watch Out for This Week

  1. UK Energy Crisis

While the UK continues to suffer from a mounting energy crisis, fuel shortages this week could dent GBP exchange rates by disrupting the UK’s economic recovery.

  • Risk Appetite

Declining market risk appetite may pressure NZD exchange rates through the rest of the week as US government debt concerns and the Evergrande crisis still threaten to spark an equity market selloff, potentially weakening the risk-sensitive ‘Kiwi’.

  • New Zealand Covid-19 Vaccination Rollout

Following reports of Covid-19 vaccinations slowing down in New Zealand, NZD could come under pressure as the country looks to emerge from lockdown conditions.

Pound New Zealand Dollar Forecast

The Pound New Zealand Dollar exchange rate may experience volatility this week as fuel shortages in the UK jeopardise economic recovery.

At the same time, Sterling losses could be limited against the ‘Kiwi’ as souring global market mood weighs on the risk-sensitive New Zealand Dollar.