Pound New Zealand (GBP/NZD) Exchange Rate Trends Sideways
(Updated
The Pound New Zealand Dollar (GBP/NZD) exchange rate is trading within a narrow range today. The currency pair shed the majority of its previous gains following the Bank of England’s (BoE) interest rate decision.
Whilst the central bank hiked rates by 50bps as forecast, it was the forward guidance presented alongside the decision that likely saw the pair slip. BoE Governor Andrew Bailey stated that the central bank was now forecasting a technical recession for the UK in the fourth quarter of 2022.
The split in the central bank’s policymakers may have also kept GBP/ZAR rangebound today. The BoE’s Monetary Policy Committee (MPC) saw two of its members vote in favour of leaving interest rates unchanged in December. The split may have prompted concerns of smaller rate hikes in the future. This could have also contributed to GBP/NZD’s losses.
At time of writing the GBP/NZD exchange rate was at around NZ$1.9233, virtually unchanged from this morning’s opening figures.
Original article continues below:
Pound New Zealand (GBP/NZD) Exchange Rate Pushed Higher by Cautious Market Mood
The Pound New Zealand Dollar (GBP/NZD) exchange rate is likely being boosted by a risk-off market mood today. Predictions of a 2023 recession for New Zealand may also be bolstering the currency pair.
Gains for GBP/NZD could be capped by subdued bets ahead of the Bank of England’s (BoE) interest rate decision, however.
At time of writing the GBP/NZD exchange rate is at around NZ$1.9331, which is up roughly 0.5% from this morning’s opening figures.
Pound (GBP) Slips Ahead of BoE Decision, Climbs Against NZD amid Risk-Off Mood
The Pound (GBP) is slipping against many of its peers today ahead of the BoE’s interest rate decision. Sterling is making gains against riskier rivals including the New Zealand Dollar (NZD) however, amid a cautious market mood.
The central bank is widely expected to hike rates by 50bps later today. The decision comes amid persistent wage growth and high inflation. There is speculation of a split between policymakers regarding the scale of the hike, however.
Michael Hewson of CMC Markets said:
‘We could see some policymakers argue for a 25bps hike as opposed to a 50bps move, while we could also see some push for a move of 75bps in order to front load the hiking process.’
Widespread industrial action may also be denting confidence in Sterling today. Nurses have begun their first strike in the union’s 106-year history today.
New Zealand (NZD) Drops as Government Forecasts 2023 Recession
The New Zealand Dollar (NZD) is falling today despite upbeat GDP figures overnight. A retreat in global risk appetite may be weighing on the ‘Kiwi’ as well as gloomy forecasts for the country’s economy.
In its half-year economic update released on Wednesday, the country’s Treasury Department forecast a recession beginning in 2023’s second quarter.
The report outlined that the NZ economy will shrink by 0.8% overall next year. Finance Minister Grant Robertson outlined how household incomes are likely to come under further pressure from interest rate hikes in the coming months.
Third quarter GDP growth figures overnight added to expectations of further aggressive interest rate hikes from the Reserve Bank of New Zealand (RBNZ). The country’s economy expanded by 2% above a forecast increase of 0.9%.
Analysts warned that the data could lead to a 75bps rate hike from the RBNZ, placing further pressure on households. Rate hike bets may be lending support to NZD today.
Poor Chinese private sector data may also be pulling NZD lower today. Factory output slowed in November whilst retail fell further into decline.
GBP/NZD Exchange Rate Forecast: Will BoE Hint at Further Rate Hikes?
Looking ahead for the Pound, the BoE’s interest rate decision later today will likely cause significant movement in the currency. The central banks forecast 50bps rate hike could bolster confidence in Sterling amid expectations of further hawkish action.
Investors will also be awaiting the BoE’s forward guidance, with any hints of the pace of policy tightening likely to cause shifts in the Pound.
On Friday, a range of forecast downbeat data for the UK’s private sectors could pull the currency lower. November’s retail sales are expected to slow amid reduced household spending and high inflation.
Additionally, December’s PMI figures are expected to indicate a contraction in the UK’s private sectors. The data could keep pressure on GBP if it prints as forecast.
For the New Zealand Dollar, November’s business PMI could weigh on the ‘Kiwi’ if it prints as forecast later today. Whilst the data is expected to confirm a mild recovery, last month’s figures may still indicate a contraction.