The Pound New Zealand Dollar (GBP/NZD) exchange rate rallied last week as the Bank of England (BoE) raised interest rates for the 14th consecutive time.
What’s Been Happening: GBP/NZD Exchange Rate Surges to Three-Year High Despite Dovish BoE
The Pound (GBP) started last week under pressure as concerns over the UK’s economic outlook dampened spirits.
With the BoE expected to continue its relentless tightening cycle, fears grew of the economic impact of elevated interest rates, keeping Sterling under pressure.
Furthermore, the final manufacturing PMI confirmed the sector suffered its sharpest slowdown in over three years amid tumbling export business.
The BoE then met market expectations and raised the interest rates for the 14th consecutive time, bringing the cash rate to 5.25%, a fresh 15-year high. However, downgrades to both inflation and growth expectations sapped demand.
Meanwhile, the New Zealand Dollar (NZD) opened the week on the front foot as a buoyant market mood cheered investors.
Midweek, an unexpected rise in the jobless rate weighed on the ‘Kiwi’ as it jumped from 3.4% to 3.6% in the second quarter.
Towards the end of the week a risk-averse shift in the market then sent the ‘Kiwi’ tumbling amid mounting fears of a global slowdown.
Three Things to Watch Out for This Week
- UK GDP
A predicted stalling of economic activity in the second quarter could weaken Sterling if the latest GDP growth figures meet forecasts.
- NZ Manufacturing PMI
An expected fifth consecutive contraction in factory activity could drag the New Zealand Dollar lower this weak.
- China Stimulus Development
Any further developments of the economic stimulus from Beijing could influence risk sentiment. If the stuttering Chinese economy is provided with a boost, the ‘Kiwi’ could climb on improving risk sentiment.
Pound New Zealand Dollar Forecast
Without a great deal of economic releases this week, movement in GBP/NZD may be driven primarily by external factors. The latest US inflation data could cause some volatility, especially if it bolsters Federal Reserve rate hike bets.