Pound New Zealand Dollar Weekly Forecast: GBP/NZD Exchange Rate Fluctuates as UK Inflation Rocks the Pound

The Pound New Zealand Dollar (GBP/NZD) exchange rate traded erratically last week, moving between a three-week high and a one-month low, as markets reacted to mixed UK data and a shifting market mood.

So far this week, GBP/NZD has slipped once again. A bullish market sentiment is supporting the risk-sensitive New Zealand Dollar (NZD).

What’s Been Happening: GBP/NZD Volatile following Mixed UK Data

The Pound (GBP) strengthened against the New Zealand Dollar through the first part of last week’s session. While upbeat UK jobs data lifted Sterling, the ‘Kiwi’ suffered from its strong positive correlation with a falling Australian Dollar (AUD).

GBP/NZD briefly struck a three-week high before a sharp improvement in the market mood saw the risk-sensitive New Zealand Dollar rally. The upbeat tone was inspired by a sharper-than-forecast cooldown in American inflation.

The Pound then faced notable selling pressure on Wednesday. UK inflation also cooled more than expected, leading markets to slash bets on another Bank of England (BoE) interest rate hike.

Sterling struck a one-month low against the ‘Kiwi’, before a souring market mood and falling commodity prices dented NZD and helped the UK currency recover.

At the very end of the week, GBP/NZD stumbled again as UK retail sales unexpectedly contracted last month. Overall, the currency pairing ended the week roughly where it started.

Three Things to Watch Out for This Week

  1. UK Autumn Statement

The focus for GBP investors this week will be the Chancellor Jeremy Hunt’s Autumn Statement. Could pro-growth policies boost the Pound?

  1. UK PMIs

Towards the end of the week, the UK’s latest PMI results could hurt Sterling. Economists expect to see an ongoing contraction in business activity this month.

  1. New Zealand Retail Sales

The ‘Kiwi’ could also face selling pressure later in the week. New Zealand’s latest retail sales figures are forecast to show a fourth consecutive quarter of shrinking domestic sales.

GBP/NZD Forecast

With some high-impact UK economic events this week, the Pound New Zealand Dollar exchange rate could face fresh volatility. In addition, risk appetite could continue to drive movement in the GBP/NZD exchange rate. Expect even more turbulence if the market mood continues to shift.

Samuel Birnie

Contact Samuel Birnie


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