Pound New Zealand Dollar (GBP/NZD) Exchange Rate
(Updated 16:40 11/08/22)
The Pound New Zealand Dollar (GBP/NZD) exchange rate slumped today. A weakened US Dollar saw the currency pair fall off a strengthened New Zealand Dollar (NZD). A risk-on market mood likely also prompted further losses for the pair.
The worsening cost-of-living crisis in the UK may have also weighed on the exchange rate today.
At time of writing the GBP/NZD exchange rate was at around $1.8963, which is down roughly -0.5% from this morning’s opening figures.
Original article continues below:
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Trends Sideways Despite BoE Rate Hike Bets
The Pound New Zealand Dollar (GBP/NZD) exchange rate is trading within a narrow range today. A return of risk-on trading may be limiting any major gains for the currency pair. Additionally, the downbeat outlook for the UK economy may also be capping upward movement.
On the other hand, Bank of England (BoE) rate hike bets could be underpinning GBP/NZD today.
At time of writing the GBP/NZD exchange rate is at around $1.9043, virtually unchanged from this morning’s opening figures.
Pound (GBP) Dented by Soaring Energy Costs
The Pound (GBP) is slipping against its riskier rivals today amid a retreat of risk appetite. The change in market mood is also likely helping to bolster Sterling against its more risk-averse peers.
Sterling may be also seeing headwinds today from after the Bank of England’s (BoE) downbeat forecasts for the UK economy last week. Following its interest rate decision the central bank issued fresh predictions that inflation in the UK would hit 13% before the end of 2023, potentially causing a recession.
The UK’s cost-of-living crisis may also be weighing on the currency today. Fresh forecasts from Cornwall Insight earlier this week predicted that household energy bills could climb above £4200 in January.
The UK’s political uncertainty may have added to these headwinds. Ministers have stated that significant action on energy costs cannot be taken until a new Prime Minister is chosen on 5 September.
The Pound may be seeing some support from BoE rate hike bets, however. Speaking on Tuesday, Deputy Governor Dave Ramsden signalled that it was ‘more likely than not’ that the central bank would raise rates further.
New Zealand Dollar (NZD) Edges Higher amid Risk-On Mood
The New Zealand Dollar (NZD) is ticking higher today amid an upbeat market mood. Bets on a 0.5% interest rate hike from the Reserve Bank of New Zealand (RBNZ) may also be bolstering the ‘Kiwi’ today.
The RBNZ is expected to announce an interest rate hike at its meeting next week. Markets are increasingly pricing in the move from the central bank amid soaring inflation.
Bets on the currency could be limited however, as analysts predict the RBNZ will slow its pace of tightening in the coming months.
Francesco Pesole, analyst at ING, said:
‘We think the RBNZ’s assessment of the economic outlook – and consequent policy adjustments – will take into consideration the worsening global picture and risks of weaker Chinese demand.’
A weaker US Dollar (USD) may also be helping NZD to make gains today. USD slumped on Wednesday following an above-forecast fall to inflation. Signs of cooling inflation in the US economy are likely to lend support to riskier currencies such as the New Zealand Dollar.
GBP/NZD Exchange Rate Forecast: Will UK GDP Figures Fuel Recession Fears?
Looking to the remainder of the week for the Pound, Friday’s GDP figures will likely cause losses for the currency. June’s figures are forecast to indicate a contraction in the UK economy, as well as a drastic slowdown to growth in the second quarter.
The data may also add to the BoE’s recession predictions, potentially further denting confidence in Sterling.
Also on Friday, a slight narrowing of the UK’s trade deficit could help to limit any losses for the Pound.
For the New Zealand Dollar, a predicted downturn to output in the country’s manufacturing sector could pull the ‘Kiwi’ lower later today. July’s business PMI is set to fall to 49.2 from 49.7 in June.