The Pound New Zealand Dollar (GBP/NZD) exchange rate slumped in the first half of the week on a lack of significant UK data. GBP/NZD later changed direction as the Pound benefitted from risk-on tailwinds, while NZ data missed forecasts.
What’s Been Happening: Dovish BoE Dents GBP; NZ Data Misses Expectations
Sterling began the week trending down against the New Zealand Dollar (NZD) on a lack of significant UK data. Meanwhile, the ‘Kiwi’ was bolstered by upside in the Australian Dollar (AUD).
Cost-of-living concerns in the UK inspired bearish trading, on top of statistics from the Office for National Statistics (ONS) which revealed that a quarter of UK adults struggled to pay their household bills last month.
Dovish rhetoric from the Bank of England (BoE) also capped upside, as Governor Andrew Bailey remarked the BoE was walking ‘a very tight line’ between curbing inflation and pushing the country into recession.
Subsequently, NZD reversed its gains as a poor market mood dampened trading sentiment alongside soaring Covid cases in China. Weaker-than-expected data releases also dented the New Zealand Dollar, as the country’s trade balance missed forecasts.
Risk-on tailwinds supported the Pound towards the end of the week, while NZD continued to suffer from reduced business confidence and softer commodity prices.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
Following the RBA’s 0.25% rate hike this morning, the BoE is expected to raise interest rates to 1% on Thursday. Such a move could bolster Sterling, if accompanied by hawkish rhetoric.
- NZ Employment Data
New Zealand’s jobs report is expected to reveal no change in unemployment or hires in Q1 2022, potentially weighing upon the ‘Kiwi’.
- PMI Data
The UK’s finalised PMI for April is expected to show a decrease in services activity, which could weigh on the Pound. Meanwhile, increasing service-sector activity in China could support the New Zealand Dollar.
Pound New Zealand Dollar Forecast
The conflict in Ukraine is also likely to affect exchange rates this week – if Russia goes ahead with attempts to annex regions of eastern Ukraine, global risk sentiment may weaken, dampening appeal for both GBP and NZD.