The Pound New Zealand Dollar (GBP/NZD) exchange rate continued to fall at the start of this week’s session after sliding on Friday.
GBP/NZD is edging higher today but is down on the week’s opening levels as tensions rise between the UK and France over post-Brexit fishing rights.
What’s Been Happening: Pound Slumps as Brexit-Related Tensions Rise
Following the UK government’s autumn Budget, the Pound (GBP) dipped as accompanying growth forecasts from the Office for Budget Responsibility (OBR) indicated the UK economy is on course to be 4% smaller due to Brexit.
GBP exchange rates slumped during Friday’s session as a fishing rights row escalated between the UK and France, and talks appeared to stall between the UK and EU over the Northern Ireland protocol.
Meanwhile, the New Zealand Dollar (NZD) firmed last week as expectations of more aggressive interest rate hikes to come from the Reserve Bank of New Zealand (RBNZ) supported the ‘Kiwi’.
However, NZD exchange rates experienced headwinds as September’s trade data revealed the country’s largest trade deficit on record, October’s business confidence index was revised sharply lower, and the threat of Chinese property giant Evergrande potentially defaulting on payments soured market sentiment.
Three Things to Watch Out for This Week
- Bank of England Interest Rate Decision
GBP investors have increasingly priced in an interest rate hike by the end of this year or early 2022.
While the Bank of England (BoE) may not raise rates at November’s meeting, some of the nine policymakers voting to hike rates, or other hints that a rise is imminent will likely drive significant movement in Sterling.
- New Zealand Unemployment Rate
With the third quarter New Zealand unemployment rate forecast to dip to 3.9%, the ‘Kiwi’ will likely benefit.
- Finalised UK Services PMI
After initial estimates showed the UK service sector unexpectedly grew in October, confirmation or any upward revisions could boost the Pound.
Pound New Zealand Dollar Forecast
The Pound New Zealand Dollar exchange rate looks set for significant movement towards the end of the week as investors react to the BoE’s interest rate decision and insight into the central bank’s forward guidance.