Pound New Zealand Dollar Exchange Rate Weekly Forecast: GBP/NZD Races to One-Month Lows as UK Enters Recession

The Pound New Zealand Dollar (GBP/NZD) exchange rate plunged last week, following the Bank of England’s (BoE) announcement that the UK had entered a recession.

What’s Been Happening: BoE Sounds Economic Alarm for UK

The Pound New Zealand Dollar exchange rate began last week on rocky footing, before the BoE sparked a sell-off. The resulting rush sent GBP plummeting to a one-month low against NZD.

Early in the week, record-high food inflation rates of 11.6% coalesced with poor consumer borrowing to refute optimistic manufacturing PMIs.

Despite the BoE enacting its biggest rate rise since 1989, their further announcement of a two-year recession wounded Sterling severely.

Friday saw GBP attempt to recover, but ultimately led to a plateau against NZD close to a one-month low.

Meanwhile, the New Zealand Dollar traded in a wide capacity, but ultimately spent most of the week on an upswing. This came as the market mood settled into an upbeat tone overall, prompting the risk-sensitive ‘Kiwi’ to enjoy support.

However, weakening optimism towards China’s economy weakened NZD somewhat as the economic superpower quashed rumours of a relaxed covid policy.

Three Things to Watch Out for This Week

  1. UK GDP

Coming in on Friday is the UK’s GDP data. An expected third-quarter contraction of 0.5% could batter the Pound.

  1. NZ Business PMI

An expected decline in New Zealand business activity on Tuesday night could weigh on the ‘Kiwi’.

  1. BoE Tenreyro Speech

BoE policymaker Silvana Tenreyro is due to speak on Tuesday. Any dovish comments may hurt Sterling.

Pound New Zealand Dollar Outlook

The Pound New Zealand Dollar exchange rate is likely to trade in a wide range this week. Markets aimed to reprice yesterday following the massive GBP sell-off, which has led to Sterling recovering on Monday. UK GDP data may serve to weaken GBP/NZD, with Sterling potentially ending the week on a sour note.

John Mulcahey

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