The Pound New Zealand Dollar (GBP/NZD) exchange rate traded a wide range through last week’s session. The Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision prompting a notable swing in the pairing.
What’s Been Happening: GBP/NZD Rocked by RBNZ Rate Hike
The New Zealand Dollar faced headwinds through the first half of last week. Rising Covid cases in China and fears of more lockdowns in the country weighed on NZD sentiment.
The ‘Kiwi’ was quick to bounce back as the RBNZ delivered its latest interest rate decision. NZD investors cheered the RBNZ’s 75bps rate hike as the bank raised interest rates to their highest level since 2009.
However, the New Zealand Dollar subsequently relinquished these gains as a cautious market mood prevailed through the end of the week.
After a slow start to the week, the Pound (GBP) found its feet again in the middle of the week. GBP/NZD rebounded from a one-week high as the UK’s latest PMI beat expectations.
A narrower than expected contraction in the private sector bolstered hopes the UK may be facing a shallower recession than previously feared.
Sterling was then supported in the latter half of the week by some hawkish comments from Bank of England (BoE) policymakers.
Three Things to Watch Out for This Week
- China Covid Developments
Risk appetite has been choppy so far this week. Chinese Covid protests initially unsettled markets, before reopening optimism revived sentiment. If Beijing moves to quell discontent by lifting more restrictions the ‘Kiwi’ is likely to rally.
- NZ Business Confidence
Also influencing the New Zealand Dollar will be ANZ’s latest business outlook survey. Will an improving outlook help to bolster NZD exchange rates?
- BoE Speeches
GBP investors may look to speeches by a couple of BoE policymakers for fresh impetus this week. A broadly hawkish consensus could propel the Pound higher.
Pound New Zealand Dollar Forecast
The Pound New Zealand Dollar exchange rate may continue to trade with volatility this week as the pairing is likely to remain sensitive to events in China.