Pound New Zealand Dollar Weekly Forecast: Russia-Ukraine War to Drive GBP/NZD?

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell last week as the UK’s cost-of-living crisis rattled GBP investors. 

What’s Been Happening: GBP/NZD Slumps on UK Cost-of-Living Crisis 

The New Zealand Dollar (NZD) was initially on the back foot at the start of the week due to mixed trade data and much lower-than-forecast credit card spending growth. 

From then on, however, the ‘Kiwi’ was able to gain against a weakening Pound (GBP) as a more upbeat market mood supported the risk-sensitive currency. 

NZD found its gains limited at the end of the week as risk sentiment shifted, causing the currency to waver. But rising materials prices underpinned the commodity-linked ‘Kiwi’, allowing it to edge higher overall. 

Meanwhile, the Pound gained ground on Monday as traders repositioned following the dovish Bank of England (BoE) decision the previous week. 

Sterling then tumbled as cost-of-living concerns dented investor confidence. UK inflation surged to a fresh 30-year high of 6.2%, and Chancellor Rishi Sunak’s spring statement drew widespread criticism for failing to protect households from the ‘historic fall’ in living standards coming over the next year. 

This weighed on the Pound for the rest of the week, with a surprise drop in UK retail sales adding to the downside. 

Three Things to Watch Out for This Week 

  1. Russia-Ukraine War 

Peace talks between Russia and Ukraine are set to resume this week. Previous negotiations have helped to cheer European investors and cool the commodities market, so these discussions could support GBP over NZD. 

  1. New Zealand Business Confidence 

A forecast fall in New Zealand business confidence could hurt the ‘Kiwi’. Economist expect it to drop to a fresh near two-year low. 

  1. UK Final GDP Growth Rate 

The UK’s final GDP growth rate has the potential to cause some sharp movement. While forecasters expect the figure to match preliminary estimates, any surprises could have big consequences for GBP. 

GBP/NZD Forecast 

With this week’s data calendar looking rather sparse, news from the Russia-Ukraine war could drive most movement in GBP/NZD. 

Samuel Birnie

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