The Pound New Zealand Dollar (GBP/NZD) exchange rate traded in a wide range last week as the UK’s disappointing GDP figures undermined the pairing’s initial gains.
What’s Been Happening: GBP/NZD Fluctuates amid UK Economic Stagnation
Last week, the Pound (GBP) gained some ground in early trade. An upbeat market mood coalesced with comments from Bank of England (BoE) Governor Andrew Bailey. He stated that monetary policy would be unaffected by banking turmoil, leaving room for further hikes.
Meanwhile, the New Zealand Dollar (NZD) appeared unable to capitalise on the bullish trade. It may have been undermined by a surprise cooldown in Chinese inflation, due to the country’s close trade links.
On Thursday, the Pound was dented as the UK economy was shown to stagnate in February. Waves of industrial action were shown to be the key pressures on the UK economy.
However, further analysis from BoE Chief Economist Huw Pill appeared to wound Sterling, causing GBP/NZD to plummet by over 1%.
Overnight, a contraction in the latest BusinessNZ PMI undermined the ‘Kiwi’. A souring market mood then sent it downward.
Three Things to Watch Out for This Week
- UK Inflation
On Wednesday, the UK’s latest CPI data is due to print. Will cooling inflation weaken Sterling?
- NZ Inflation
New Zealand’s Q3 inflation data is due on Wednesday evening. An uptick is forecast, which could spark further rate hike bets and boost NZD.
- Private Sector PMI Flashes
UK private sector indexes for April are due to print on Friday. A slowdown in the UK service sector could weigh on GBP.
GBP/NZD Outlook
On Friday, the UK’s latest retail sales may also shape the pairing. A decline in March is expected, which could weaken Sterling against the ‘Kiwi’.
Elsewhere, risk appetite is likely to be a core driver of movement over the week. With the antipodean currency being more risk-sensitive, bullish trade could lift NZD over GBP.