The Pound New Zealand Dollar exchange rate climbed over the past week. The currency pair saw some instability amid volatility in Sterling. GBP/NZD found support after the Bank of England (BoE) intervened in the bond market, however.
What’s Been Happening: Pound Recovers after Mass Sell-Off in Bond Market
The Pound (GBP) slumped at the opening of the week. Confidence in Sterling remained low amid concerns that planned tax cuts could lead to inflated borrowing.
GBP found some support on Wednesday following the BoE’s intervention in the bond market. The central bank committed to buying government bonds amid a mass sell-off.
Sterling saw its gains extended on Monday after a U-turn by the UK government over some elements of its mini budget. Additionally, Kwarteng stated that he would be bringing forward the publication of his medium-term fiscal plans.
The New Zealand Dollar (NZD) struggled over much of the past week amid a retreat in risk appetite.
NZD did see drastic losses limited by hawkish Reserve Bank of New Zealand (RBNZ) comments, however.
Weekly highlights
- RBNZ Interest Rate Decision
If the RBNZ raises rates by 0.5% then it could push NZD higher, particularly after the Reserve Bank of Australia’s (RBA) below-forecast rate hike. New Zealand’s economy has remained strong despite the continued rate hikes. Will comments from the RBNZ signal further rate hikes?
- UK Final PMI Readings
The final reading of Septembers PMI for the UK’s dominant services sector is forecast to confirm a contraction for the month. Will the figures pull the Pound lower?
- UK Economic Policy
Investors remain wary over the long-term outlook for the UK. With PM Liz Truss’ speech expected on Wednesday, markets will be watching closely for any shifts in policy.
GBP/NZD Forecast
For the Pound, any further movements in the UK bond market could affect the currency this week. The New Zealand Dollar could see some gains later on Tuesday if they Global Dairy Trade Price Index rises again.