Pound New Zealand Dollar (GBP/NZD) Exchange Rate Trims Previous Gains as Investors Buy the Dip
The Pound New Zealand Dollar (GBP/NZD) exchange rate is falling today, trimming some of yesterday’s impressive gains, as the pairing seems to have entered overbought conditions.
At the time of writing, the GBP/NZD exchange rate is trading at around NZ$2.0640, down a modest 0.2% on the day.
New Zealand Dollar (NZD) Regains Ground following Yesterday’s Selloff
The New Zealand Dollar (NZD) is managed to recoup some of yesterday’s losses today, having a suffered a selloff following upbeat US economic data.
Yesterday afternoon, stronger-than-expected jobs and service-sector data from America boosted expectations that the Federal Reserve will continue raising interest rates. This sparked widespread anxiety in the markets, prompting a sharp decline in the risk-sensitive New Zealand Dollar.
However, NZD seems to have been oversold and started to attract some dip-buying overnight. It’s extending its recovery somewhat this morning, although the market mood looks mixed. The ‘Kiwi’ still remains down compared to the start of yesterday’s session.
Pound (GBP) Mixed amid Rate Hike Worries
Meanwhile, the Pound (GBP) is facing mixed movement today as economic worries offset Bank of England (BoE) interest rate rise bets.
Forecasters expect the BoE to continue cranking interest rates higher to deal with the UK’s worryingly stubborn inflation problem.
While rate hike bets often support the respective currency, fears are growing that the UK will suffer a ‘hard landing’, with the BoE triggering a recession in order to bring inflation back to target.
These mixed factors have caused volatility in the Pound over the past few weeks, and today Sterling is struggling for a clear direction. An ongoing lack of fresh UK data is adding to the muted tone.
The subdued sentiment around Sterling seems to be giving the ‘Kiwi’ space to recoup some of yesterday’s losses.
GBP/NZD Exchange Rate Forecast: US Data to Sour the Market Mood?
Later in the session, more high-impact US economic data could impact the Pound ‘Kiwi’ pairing.
The latest American non-farm payrolls report is out. While it’s set to show a slowdown in job creation, the score is still expected to be high. Furthermore, after yesterday’s ADP employment report exceeded forecasts, there’s a chance today’s data could surprise to the upside.
If the data points to ongoing tightness in the US labour market, the expectation of more aggressive action from the Federal Reserve could significantly sour the market mood, which in turn could see the risk-sensitive ‘Kiwi’ spiral.
In the meantime, domestic UK news could impact the Pound. Any fresh headlines highlighting the trouble facing the British economy could pressure Sterling.