The Pound New Zealand Dollar exchange rate traded in a wide range last week. A fluctuating market mood infusing volatility into the pairing.
What’s Been Happening: Mixed Market Mood Rocks GBP/NZD
The Pound struggled to find momentum at the start of last week but was still able to advance against the New Zealand Dollar amid a slump in market risk appetite.
Sterling then attracted support in the middle of the week following the announcement of a UK-US gas deal. It’s hoped the deal will help protect the UK from any further supply and price shocks next year.
The latter half of the week saw the ‘Kiwi’ rebound as market risk appetite improved. Beijing’s move to start easing Covid restrictions helped to cheer investors on hopes China’s reopening could provide a shot in the arm for global growth.
At the same time, the Pound faced pressure amid fears that widespread UK industrial action in the run up to Christmas could severely disrupt the UK economy.
Three Things to Watch Out for This Week
- BoE Interest Rate Decision
With a 50bps rate hike already priced in, GBP investors are likely to be focused on the Bank of England’s (BoE) forward guidance. Will a cautious outlook for 2023 push the Pound lower?
- UK Inflation
Ahead of the BoE rate decision, Sterling may be influenced by the latest UK CPI release. Another above forecast inflation reading could stoke cost of living concerns and weaken GBP exchange rates.
- NZ GDP
For NZD investors the spotlight this week will be on New Zealand’s GDP figures. Will slowing growth in the third quarter push the ‘Kiwi’ lower?
GBP/NZD Forecast
In addition to a host of high-impact data releases, it’s likely the Pound New Zealand Dollar exchange rate will remain sensitive to market risk appetite this week, potentially infusing the pairing with further volatility.