Pound New Zealand Dollar (GBP/NZD) Weekly Forecast: Exchange Rate Drops as UK CPI Hits 40-Year High

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell overall last week, though peaked initially on an upbeat speech from Bank of England (BoE) policymaker Michael Saunders. The major event on the weekly docket was UK inflation, which printed at a 40-year high of 9.4%.

What’s Been Happening: GBP Falls Amid Soaring Living Costs

The main event last week was the UK’s CPI inflation release. This increased above expectations but failed to lend support to the Pound (GBP).

A fall in core inflation limited Sterling tailwinds alongside increasing cost-of-living concerns as wage growth failed to keep pace with rising price pressures.

Meanwhile, risk-off sentiment prevented the New Zealand Dollar (NZD) from making significant gains. ‘Kiwi’ downside was exacerbated on Wednesday evening as New Zealand’s trade balance printed with a $701m deficit rather than the surplus expected.

GBP/NZD trended down amid a quiet docket on Thursday. This trend extended into Friday as UK retail data revealed a fall in June’s sales.

The Pound New Zealand Dollar exchange rate then rebounded slightly as UK PMI data surprised to the upside.

Three Things to Watch Out for This Week

  1. NZ Business Confidence
    Business confidence in July is expected to have fallen to -65, potentially exerting NZD headwinds.
  2. UK Lending Data
    The Bank of England (BOE)’s consumer credit data is expected to have increased to £1bn in June, suggesting households are having to borrow more to make ends meet. GBP could fall on cost-of-living implications.
  3. Australian Inflation
    AU inflation is expected to have risen by 1.1% in Q2 2022, potentially buoying the Australian Dollar (AUD) and the ‘Kiwi’ by association.

Pound New Zealand Dollar Forecast

Additional releases from Australia may influence NZD trading this week, including retail sales and PPI. Both are expected to increase, potentially buoying the New Zealand Dollar if AUD enjoys tailwinds.

Elsewhere, political developments in the UK could also have an impact upon trading. As the competition escalates between leadership candidates Liz Truss and Rishi Sunak, Sterling may experience volatility.

Olivia Evershed

Contact Olivia Evershed


Related
Do Not Sell My Personal Information