The Pound New Zealand Dollar (GBP/NZD) exchange rate traded in a wide range last week, closing higher overall, as inflation data and a shifting market mood rocked the currency pair.
What’s Been Happening: GBP/NZD Fluctuates as CPIs Surprise Markets
The Pound (GBP) initially found success against the risk-sensitive New Zealand Dollar (NZD) last week, as weaker Chinese GDP data soured the market mood, which in turn weighed on the ‘Kiwi’.
New Zealand’s consumer price index then brought some turbulence to the pairing. Inflation beat forecasts, lending NZD some support against GBP.
The UK’s own CPI brought further headwinds for Sterling. Both headline and core inflation printed below forecasts for the first time in five months, leading to a sharp repricing of Bank of England (BoE) interest rate rise bets.
Strong Australian jobs data then aided the ‘Kiwi’ in mid-week trade, thanks to the currency’s positive correlation with the Australian Dollar (AUD).
However, a souring market mood – prompted by fears of more Federal Reserve rate hikes – dragged NZD lower through the final part of the week.
Meanwhile, the Pound enjoyed stronger-than-forecast UK sales data, with sales growth printing at 0.7% versus the 0.2% forecast.
Three Things to Watch Out for This Week
- Risk Appetite
Market sentiment could remain a defining factor for GBP/NZD in the week ahead, particularly with the Fed rate decision on Wednesday evening. Could a more cautious tone from the US central bank cheer markets, thereby boosting the New Zealand Dollar?
- New Zealand Consumer Confidence
Forecasters expect consumer morale in New Zealand to have improved this month. If predictions are accurate, the ‘Kiwi’ might find support.
- CBI Data Releases
Amid a lack of more impactful data, three releases from the Confederation of British Industry (CBI) could affect Sterling. Could more gloomy data see the Pound stumble?
GBP/NZD Forecast
So far this week, Sterling has slumped following dire PMI results. Meanwhile, news of economic stimulus measures from China have boosted the ‘Kiwi’. GBP/NZD could face further losses throughout the week if an upbeat market mood keeps the New Zealand Dollar afloat.