The Pound New Zealand Dollar (GBP/NZD) exchange rate slumped over the course of last week. A poor assessment for the UK economy and political uncertainty likely weighed on the currency pair. Some upbeat Chinese date may have also helped to buoy GBP/NZD.
What’s Been Happening: Pound Tumbles as Markets Await Truss’ Response to Soaring Energy Costs
The Pound (GBP) tumbled over the course of the week as a downbeat outlook for the UK continued to pull the currency lower. Multiple warnings of soaring inflation in 2023 likely pushed Sterling lower.
Political uncertainty potentially also kept pressure on the Pound. Investors remained uncertain regarding the economic path Conservative leadership hopefully Liz Truss might take.
The New Zealand Dollar (NZD) saw some volatile movements last week. The ‘Kiwi’ climbed off the back of some positive industrial data from China.
Poor NZ trade data capped gains for NZD however, as well as a largely risk-off market mood.
- Liz Truss’ Premiership
As Liz Truss is confirmed as the UK’s new Prime Minister, investors will be looking to her for a concrete response regarding soaring energy costs. Will any confirmation of aid from Truss help to bolster Sterling?
- Chinese Inflation Figures
The outlook for the world’s second-largest economy could affect global risk appetite and NZD’s trading prospects. A forecast uptick to inflation and widening of China’s trade surplus may improve the country’s outlook.
- Global Dairy Trade Price Index
The crucial trade index for NZ has been on a downward spiral since March, to its lowest point in August for 12 months. Will soaring inflation and rising global costs see the trade index fall further and cause NZD to slip?
GBP could find some support from bets on interest rate hikes from the Bank of England (BoE) in the face of soaring inflation.
NZD could also see a boost amid bets on interest rate hikes from the Reserve Bank of New Zealand (RBNZ). Recent research conducted by ANZ indicated that further hikes would be necessary to tame inflation.