Pound New Zealand Dollar Exchange Rate Weekly Forecast: GBP/NZD Rebounds from One-Month Low

The Pound New Zealand (GBP/NZD) exchange rate slumped to a one-month low last week before bouncing back thanks to poor New Zealand data and a darkening market mood.

So far this week, the Pound (GBP) has faced headwinds after UK jobs data disappointed GBP investors.

What’s Been Happening: GBP/NZD Stages Strong Recovery

The Pound stumbled against the New Zealand Dollar (NZD) from the start of last week’s trade. UK markets were closed for the King’s coronation bank holiday, while a cheery market mood supported the risk-sensitive ‘Kiwi’.

Sterling remained muted as the week went on, with investors bracing for the Bank of England (BoE) interest rate decision.

This hesitancy among GBP investors allowed the ‘Kiwi’ to climb to a one-month high against the Pound. A weaker-than-forecast US CPI boosted NZD, as did a surprise uptick in New Zealand food inflation.

However, the latter part of the week saw GBP/NZD rally strongly, despite the Pound losing ground elsewhere in the wake of the BoE meeting.

New Zealand manufacturing activity unexpectedly contracted and business inflation expectations eased, which saw traders rein in bets on more policy tightening from the Reserve Bank of New Zealand (RBNZ). A souring market mood added to NZD’s losses.

Mixed UK GDP data on Friday may have prevented further gains.

Three Things to Watch Out for This Week

  1. BoE Bailey Speech

BoE Governor Andrew Bailey is due to speak on Wednesday. If he reiterates the bank’s expectations that inflation will rapidly ease, GBP could fall.

  1. NZ Balance of Trade

A forecast expansion in New Zealand’s trade surplus last month could support the ‘Kiwi’ on Thursday night.

  1. Risk Appetite

Risk sentiment will likely continue to impact the GBP/NZD exchange rate. If the market mood continues to improve, the riskier New Zealand Dollar could gain ground against the Pound.

GBP/NZD Forecast

Economic data is thin on the ground for the remainder of this week’s session, so risk appetite could be the defining factor in the GBP/NZD exchange rate. As a result, we may see choppy trade for the currency pairing.

Samuel Birnie

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