Pound New Zealand Dollar (GBP/NZD) Exchange Rate Weakens as Upbeat Market Lifts ‘Kiwi’

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Dips amid Bullish Market Mood

The Pound New Zealand Dollar (GBP/NZD) exchange rate is falling this morning, as an upbeat market mood lifts the risk-sensitive ‘Kiwi’.

At the time of writing, GBP/NZD is trading around NZ$1.9072, a fall of roughly 0.2% from the morning’s opening rates.

New Zealand Dollar (NZD) Rallies on Upbeat Market Mood

The New Zealand Dollar (NZD) is rallying this morning, care of an upbeat market mood. As a particularly risk-sensitive currency, the ‘Kiwi’ is more susceptible to shifts in investor optimism.

Currently, the markets are in an upbeat mood as investors pare back their expectations for further rate hikes from the Federal Reserve. Furthermore, investors seem to be betting that the Fed’s hawkish attitude has room to relax.

Francesco Pesole, FX Strategist at ING, explains further:

‘This might be a sign that markets are seeing this moment as the peak in the Fed’s hawkish communication and are now eyeing opportunities to re-enter short-USD pro-cyclical positions at more attractive levels.’

Similarly, easing Sino-American tensions could be further lifting the ‘Kiwi’. As New Zealand holds close trading links with China, NZD investors are lending support to NZD.

Pound (GBP) Limited amid Domestic Headwinds

The Pound (GBP) is seeing mixed trade this morning, as it climbs against safer options but falls against riskier assets.

With little to go by in terms of macroeconomic releases, GBP investors may be focusing on domestic headlines. This morning, the UK’s housing market has been under scrutiny as prices continue to fall alongside demand.

A usual signifier that a country is entering a recession, the slip in prices may be amplifying recession anxieties amongst investors.

Cushioning Sterling is likely the current cheery market mood, alongside this morning’s grilling for Bank of England (BoE) policymakers.

BoE Governor Andrew Bailey, Chief Economist Huw Pill and external policymakers are currently discussing monetary policy with the Treasury Committee.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Forecast: UK GDP Data to Mute Sterling?

Looking ahead for the Pound, Friday sees the release of the UK’s latest GDP data. Of keen interest to investors is the Q4 release, which is currently forecast to show that the UK’s economy stalled.

Because of this, it could point to the UK avoiding a recession in the fourth quarter, which could bring cheer to GBP investors. However, the monthly and yearly data releases paint a more sombre picture, with both showing sharp declines. As such, gains made from optimism around dodging a recession could be muted by the steep slowdown faced by the UK economy.

For the New Zealand Dollar, the BusinessNZ PMI is due to print overnight. This index is forecast to show an uptick in industrial activity, but still remain in contractionary territory. Because of this, the ‘Kiwi’ may weaken as it points to economic weakness.

John Mulcahey

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