GBP/NZD Exchange Rate Slumps amid Volatile Risk Mood

The Pound New Zealand Dollar (GBP/NZD) exchange rate saw some volatile movement last week. Shifts in risk appetite likely prompted the movements. The currency pair slipped on Thursday, potentially motivated by strong Australian employment figures and a risk-on impulse.

What’s Been Happening: Sterling Slips Despite Surprise GDP Growth

The Pound (GBP) slipped last week amid continued political uncertainty in the UK. Monday saw the leadership contest to replace Boris Johnson as Prime Minister begin.

GBP may have also seen some Brexit-related headwinds last week. Investors remained concerned at the possibility of a UK-EU trade war.

Sterling may have seen some of its losses limited on Wednesday by a surprise return to growth, however. May’s GDP figures printed above-forecast due to a surge in GP and holiday bookings.

The New Zealand Dollar (NZD) managed to tick higher last week. A 0.5% interest rate hike from the Reserve Bank of New Zealand (RBNZ) helped to bolster the ‘Kiwi’. Gains were limited however after a broadly neutral statement from the central bank.

NZD continued to climb throughout Thursday and Friday. Strong Australian employment figures may have helped to boost the currency as well as a return of risk appetite.

Weekly highlights

  1. UK Inflation

A forecast rise in inflation last month could increase pressure on Sterling amid fears of a recession. On the other hand, could the figures prompt extra bets on further rate hikes from the Bank of England (BoE)?

  1. UK Retail Sales

Will another contraction in sales growth in June weigh on Sterling and contribute to the UK’s gloomy economic outlook?

  1. NZ Trade Figures

New Zealand’s latest trade figures are expected to report an expansion of the nation’s trade surplus in June, potentially boosting NZD exchange rates.

GBP/NZD Forecast

PMI figures for the UK could pull the GBP/NZD exchange rate lower if they print as forecast on Friday. Growth across all private sectors is expected to slump in July.

Gareth Monk

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