The Pound New Zealand Dollar (GBP/NZD) exchange rate fluctuated last week, although it managed to climb slightly higher overall.
The volatility has continued this week, with GBP/NZD slumping and then spiking in early trade.
What’s Been Happening: GBP/NZD Trends Higher through Choppy Trade
The New Zealand Dollar (NZD) traded in a wide range last week, as a shifting market mood caused turbulence for the risk-sensitive currency.
Sentiment among investors fluctuated throughout the week. Geopolitical worries triggered bearish trade while hopes of a less aggressive approach from the Federal Reserve sparked some bullish runs in the markets.
NZD investors mostly ignored an above-forecast New Zealand PMI reading on Thursday night, with risk appetite continuing to drive most movement.
As for the Pound (GBP), Sterling found some support early in the week following hawkish comments from Bank of England (BoE) rate setter Catherine Mann, who hinted at further interest rate hikes.
Hopes about the UK economy also underpinned GBP. A new forecast for the UK economy suggested it may avoid a recession this year, while the latest GDP data showed that the country did avoid a recession at the end of 2022.
These factors helped GBP/NZD trend higher overall last week, despite the choppy trade.
Three Things to Watch Out for This Week
- UK Inflation
UK inflation has started to cool, but nowhere near as sharply as it’s easing in other countries. If it remains in double digits, expectations of more BoE rate rises could boost Sterling.
- UK Retail Sales
The latest UK retail sales data could hurt Sterling by reawakening recession fears. Economists expect sales to have shrunk by 0.3% last month, following December’s 1% slump.
- Risk Appetite
New Zealand data is in short supply for the remainder of this week’s session. As a result, the ‘Kiwi’ could trade in relation to market mood.
GBP/NZD Forecast
This week could bring more choppy trade for GBP/NZD, with the UK inflation rate potentially triggering volatility and risk appetite continuing to drive shifts in movement for the ‘Kiwi’.