The Pound New Zealand Dollar (GBP/NZD) exchange rate rallied last week after an uptick in core inflation bolstered Bank of England (BoE) rate hike bets, before shedding some of its gains following poor UK retail sales figures.
What’s Been Happening: Pound Fluctuates on Mixed Data
The Pound initially firmed last week. Stronger-than-expected UK employment and inflation data both reflected positively on Sterling as it bolstered BoE rate hike expectations.
However, the Pound was unable to sustain its gains for long. An abysmal retail sales print weighed heavily on GBP exchange rates at the end of the week. A much larger-than-expected contraction stoking recession fears and denting BoE rate hike bets.
The New Zealand Dollar (NZD) came under some notable pressure through the first half of last week as market risk appetite soured.
This followed the release of a stronger-than-expected US inflation print. The release turbocharged Federal Reserve rate hike expectations and took a heavy toll on risk sentiment as it stoked global recession concerns.
The ‘Kiwi’ was underpinned by upbeat GDP figures on Wednesday however, as well as positive trade figures from China.
- BoE Interest Rate Decision
The central bank is expected to hike interest rates by 0.5% on Thursday. Some economists are predicting a 0.75% hike however. Could an above-forecast rate hike help Sterling make gains?
- NZ Balance of Trade
The ‘Kiwi’ could struggle on Wednesday if the country’s trade deficit widens as forecast. August’s deficit is set to grow to NZ$-1300M amid the high cost of energy product imports.
- UK PMIs
Mixed PMI figures on Friday could dampen enthusiasm for the Pound. The country’s dominant services sector is expected to slump amid soaring energy costs. Will the figures weigh on GBP?
The Pound could see a boost this week as the UK economy returns to normal activity after the country’s period of mourning.
The latest reading of the global dairy trade price index could prompt movement in NZD on Tuesday. The US Federal Reserve’s interest rate decision could drive the ‘Kiwi’ lower if it strengthens the US Dollar (USD).