The Pound New Zealand Dollar (GBP/NZD) exchange rate fell to a four-month low last week, as worries about the UK economy kept Sterling on the defensive.
What’s Been Happening: GBP/NZD Slides amid Bleak UK Outlook
The Pound (GBP) faced pressure early last week as accountancy giant KPMG published its latest UK Economic Outlook, forecasting slowing growth from now through to the end of next year.
Ratings agency S&P Global Ratings then released a similar report, but Sterling was spared further losses as a downbeat market mood weighed on the risk-sensitive New Zealand Dollar (NZD).
This caused some volatility midweek, with GBP/NZD fluctuating. In addition, rallying commodity prices lent NZD some support while falling UK mortgage rates helped GBP recoup losses.
Towards the end of the week, however, the Pound slumped against the ‘Kiwi’. A sudden risk-on rally boosted NZD, along with an unexpected improvement in New Zealand consumer confidence.
GBP/NZD hit a four-month low on Friday. Recession fears weighed on Sterling, despite an upward revision to UK GDP in the first quarter. The Pound managed to recoup the day’s losses by the end of trade, though it remained down on the week.
Three Things to Watch Out for This Week
- RBNZ Interest Rate Decision
The Reserve Bank of New Zealand (RBNZ) meets on Wednesday to set monetary policy. If it leaves rates unchanged for a third consecutive time then NZD could slide.
- UK Services PMI
The only noteworthy GBP data this week is the UK’s final services PMI, also out on Wednesday. The release could put pressure on the Pound if it confirms a troublingly steep contraction in activity.
- Risk Appetite
The market mood could continue to drive movement in the New Zealand Dollar. Could an improving mood underpin the riskier ‘Kiwi’?
GBP/NZD Forecast
The coming week could bring more volatility to the Pound ‘Kiwi’ pair, with both currencies facing potential losses due to Wednesday’s economic events. Risk appetite could cause additional turbulence, with a shifting mood potentially seeing GBP/NZD see-saw. However, UK economic woes could mean the Pound remains close to recent lows.