The Pound-New Zealand Dollar could remain supported if weak UK data is limited, while softer New Zealand inflation may keep RBNZ hike bets under pressure.
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose on Thursday as softer New Zealand inflation dented the ‘Kiwi’.
At the time of writing, GBP/NZD traded at NZ$2.3560, up 0.3% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.356379 (+0.34%)
Euro to New Zealand Dollar (EUR/NZD): 1.974324 (+0.24%)
New Zealand Dollar to Dollar (NZD/USD): 0.567929 (-0.43%)
DAILY RECAP:
The New Zealand Dollar (NZD) fell during Thursday’s Asian trading session as markets digested the latest New Zealand inflation figures.
Price pressures cooled more than forecast in the third quarter. Inflation eased from 4.1% to 3.7%, below market expectations for 3.8%.
The data dampened bets that the Reserve Bank of New Zealand (RBNZ) would raise interest rates at its policy decision next week, which put pressure on the ‘Kiwi’.
Additionally, a souring market mood dented demand for the risk-sensitive New Zealand Dollar.
Meanwhile, the Pound (GBP) attracted limited support on Thursday, with Sterling seemingly enjoying the afterglow of high-impact data published earlier in the week.
Tuesday’s jobs report showed an unexpected decline in unemployment, while Wednesday’s consumer price index revealed a sharper-than-forecast rise in inflation.
Taken together, these releases fuelled bets that the Bank of England (BoE) could shift to a more hawkish approach to monetary policy over the coming months, which continued providing the Pound with support into Thursday’s session.
Near-Term GBP/NZD Forecast: Downbeat UK Data to Dent Sterling?
Looking ahead, Sterling could face headwinds through the final session of the week as markets react to new economic data.
The UK’s latest retail sales figures are forecast to show a 0.1% contraction in sales growth in September, which could raise concerns about the country’s economic resilience.
Later in the morning, the preliminary PMI results for October are expected to show that activity in the UK services and manufacturing sectors slowed. This could increase pressure on the Pound.
Elsewhere, market risk appetite may impact GBP/NZD. If a risk-off mood prevails, the risk-sensitive New Zealand Dollar may face resistance.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar could strengthen if UK inflation reinforces BoE hike bets, while softer New Zealand CPI may weigh on the Kiwi.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate traded sideways on Tuesday as strengthening Reserve Bank of New Zealand (RBNZ) interest rate expectations were offset by the UK’s latest employment figures.
At the time of writing, GBP/NZD was trading at around NZ$2.3479. Virtually unchanged from the start of Tuesday's session.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.34932 (+0.01%)
Euro to New Zealand Dollar (EUR/NZD): 1.973768 (-0.28%)
New Zealand Dollar to Dollar (NZD/USD): 0.568233 (+0.30%)
DAILY RECAP:
The New Zealand dollar (NZD) rallied through Tuesday’s Asian session, underpinned by expectations for further interest rate hikes from the Reserve Bank of New Zealand.
RBNZ Chief Economist Paul Conway recently indicated that the bank’s upcoming decision could go either way, although he acknowledged that an increase in rates remains more likely than not as he highlighted the inflationary effects of higher global oil prices.
These gains were reinforced by positive risk flows, which continued to be underpinned by broad weakness in the US Dollar (USD).
While left rangebound against the New Zealand Dollar, the Pound (GBP) appreciated against the majority of its other peers on Tuesday, following the publication of the UK’s latest jobs report.
According to data published by the Office for National Statistics (ONS), unemployment in the UK fell from 4.9% to 4.7% in August as the UK economy unexpectedly added 102,000 jobs.
At the same time, annual growth in regular pay, excluding bonuses, accelerated from 3.6% to 3.7% over the same period.
Signs of a more resilient UK labour market were a welcome surprise for Sterling, which caught fresh bids as it further cemented expectations that the Bank of England (BoE) will kick-start a new hiking cycle next month.
Near-Term GBP/NZD Forecast: Rising Inflation to Extend Additional Support to Sterling?
Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate may accelerate on Wednesday with the publication of the UK’s latest consumer price index.
September’s CPI figures are forecast to report inflation continues to rise, with price growth expected to accelerate from 3.1% to 3.4% last month.
This will no doubt stoke hawkish BoE expectations and give Sterling another leg up in mid-week trade.
Meanwhile, the publication of New Zealand’s quarterly CPI figures will be in the spotlight for NZD investors late on Wednesday.
However, the data could test recent support for the ‘Kiwi’ if a cooling of inflation in the third quarter dampens RBNZ rate bets.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar could strengthen if UK inflation reinforces BoE hike bets, while softer New Zealand inflation may weigh on the Kiwi.
Trade in the Pound to New Zealand Dollar (GBP/NZD) exchange rate was uneven last week amid a fluctuating market mood.
At the time of writing, GBP/NZD was trading at around NZ$2.358. Almost unchanged from start of last week’s session.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.358121 (-0.14%)
Euro to New Zealand Dollar (EUR/NZD): 1.988273 (-0.34%)
New Zealand Dollar to Dollar (NZD/USD): 0.565285 (+0.58%)
DAILY RECAP:
The New Zealand dollar (NZD) tracked shifting risk appetite throughout the week, experiencing notable swings as investors reacted to geopolitical uncertainty, rising energy prices and changing expectations for US interest rates
After initially struggling amid concerns over renewed tensions in the Middle East, the ‘Kiwi’ was catapulted higher as a sharp correction in the US Dollar (USD) triggered a notable risk rally in the latter half of the session.
The New Zealand Dollar also benefited from comments by Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway, who signalled that further interest rate increases could be necessary to bring inflation under control.
The Pound (GBP) traded without strong conviction through the first half of last week’s session, as conflicting economic signals left investors hesitant.
Although the International Monetary Fund (IMF) raised its outlook for UK economic growth, gains were constrained by remarks from Bank of England (BoE) Chief Economist Huw Pill.
Pill, typically regarded as one of the more hawkish members of the Monetary Policy Committee, sought to rein in expectations for an aggressive tightening cycle, questioning market bets that the BoE would raise interest rates four times over the coming year.
The Pound found firmer footing later in the week, however, after the latest UK GDP figures revealed an unexpected expansion in August, overturning forecasts that the economy would contract.
Near-Term GBP/NZD Forecast: UK Inflation in the Spotlight
Looking ahead, the Pound to US Dollar exchange rate could gain ground this week as investors reacted to the latest UK consumer price index.
Forecasts point to inflation climbing to 3.4% in September. Such a reading could lend support to Sterling by reinforcing expectations that the BoE will start raising interest rates next month.
However, the latest UK labour market figures may limit the Pound’s advance. Unemployment is expected to have increased in August, potentially tempering optimism over the strength of the domestic economy.
Meanwhile, New Zealand’s own inflation figures will likely act as the primary catalyst for the ‘kiwi’ with NZD exchange rates likely to soften if an easing of price pressures in the third quarter dampens RBNZ rate hike expectations.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar rate could face further pressure if UK GDP contracts, while risk appetite may determine whether the Kiwi can extend its recovery. The Pound to New Zealand Dollar (GBP/NZD) exchange rate was muted on Wednesday after a notable Bank of England (BoE) policymaker expressed scepticism about market pricing for future interest rate hikes.
At the time of writing, GBP/NZD was trading at around NZ$2.3591. A modest decline from the start of Tuesday's session.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.362755 (+0.05%)
Euro to New Zealand Dollar (EUR/NZD): 1.993349 (-0.10%)
New Zealand Dollar to Dollar (NZD/USD): 0.561552 (+0.03%)
DAILY RECAP:
The Pound (GBP) faced headwinds on Wednesday, following comments by Bank of England Chief Economist Huw Pill on the sidelines of the International Monetary Fund’s (IMF) annual meeting in Bangkok.
Huw spoke about the need for the bank to begin tightening monetary policy but questioned the wisdom that the BoE will deliver four interest rate hikes over the next year.
Current market pricing suggests there is a 92% chance of the BoE raising rates by 25 basis points in November, with three more 25bps hikes following before September 2027.
As one of the most hawkish members of the BoE’s Monetary Policy Committee (MPC), Pill’s comments should raise some doubts amongst the more bullish GBP investors who are pushing the four-hike narrative.
The New Zealand dollar (NZD) appreciated during Wednesday’s Asian session, with the ‘Kiwi’ drawing support from a sharp improvement in Chinese trade data
Figures revealed that China’s trade surplus widened to $133.53bn in September, marking its largest monthly surplus in 20 months and comfortably exceeding market expectations.
In addition to underpinning a broader improvement in risk appetite, the data provided a particular boost to those currencies closely linked to the Chinese economy, such as the New Zealand and Australian Dollars.
However, analysts cautioned that September’s trade data primarily reflected strong overseas demand for Chinese goods rather than a decisive recovery in domestic consumption, which raises questions about whether the jump in import growth can be sustained.
Near-Term GBP/NZD Forecast: Contraction in GDP to Sink Sterling? Looking ahead to the second half of the week, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could come under more notable pressure on Thursday, with the release of the UK’s latest GDP figures.
Consensus forecasts predict month-on-month growth contracted in August, further constricting the amount of fiscal headroom available to Chancellor John Healey as he prepares to deliver his first Autumn Budget later this month.
Meanwhile, in the absence of any impactful NZ data, movement in the ‘kiwi’ will be tied to market risk dynamics, with NZD potentially faltering if the US Dollar (USD) resumes its bullish run following the publication of the latest US inflation figures.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate climbed to 2.3641 on Monday, approaching October highs as renewed energy-price concerns weighed on the Kiwi.
UK GDP and New Zealand manufacturing figures will provide the next tests.
Latest-Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.364051 (+0.28%)
Euro to New Zealand Dollar (EUR/NZD): 1.99782 (+0.11%)
New Zealand Dollar to Dollar (NZD/USD): 0.559832 (-0.26%)
WEEKLY RECAP:
GBP/NZD edged higher on Monday after spending much of last week trading close to 2.36.
The pair gained 2.9% during September, with the New Zealand Dollar struggling against persistent energy-market volatility and a stronger US Dollar.
Pound Sterling has also faced pressure, although expectations of another Bank of England interest-rate increase have provided some support.
MUFG expects the BoE to raise rates in November but warns that confidence in Britain's public finances remains crucial ahead of the 28 October Budget.
The Kiwi faces a different problem.
New Zealand's inflation outlook has deteriorated, with higher fuel costs pushing consumer prices higher despite an uneven domestic recovery.
Westpac Chief Economist Kelly Eckhold now expects inflation to reach 4.2% in December, compared with an earlier forecast of 3.7% for September.
He cautioned: "Growth forecasts are revised down and have downside risks."
The Reserve Bank of New Zealand raised interest rates to 2.75% in September, although Westpac expects policymakers to pause at their next meeting on 28 October before increasing rates to 3% in December.
That prospective tightening offers the Kiwi some support, but weak housing activity and concerns about household spending have limited its recovery.
Near-Term GBP/NZD Forecast: UK GDP and New Zealand Manufacturing in Focus For Pound Sterling, Thursday's UK GDP release is the week's principal event.
Economists expect the economy to contract 0.1% in August following July's 0.4% expansion. Manufacturing, industrial production and trade figures are also scheduled.
Bank of England Governor Andrew Bailey's remarks on Wednesday and Friday could influence expectations for November's policy decision.
For the New Zealand Dollar, Tuesday brings visitor arrivals, followed by Thursday's BusinessNZ Manufacturing Index and Food Price Index, released late in the UK evening.
China's inflation and trade figures will also influence sentiment towards the export-sensitive Kiwi.
Stronger UK data alongside disappointing New Zealand manufacturing figures could push GBP/NZD towards 2.3800.
However, weak UK growth and improving New Zealand activity could pull the pair back towards 2.3400.
In the near-term, Exchange Rates UK Research forecast that the Pound to New Zealand Dollar exchange rate will trade within the 2.3400-2.3800 range.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could stay elevated if risk appetite remains weak, although stronger NZ business confidence may offer the Kiwi some support.
The Pound New Zealand Dollar (GBP/NZD) exchange rate hit a fresh ten-year high on Monday as Sterling continued to attract support.
At the time of writing, GBP/NZD traded at NZ$2.3647, up almost 0.3% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.362863 (+0.20%)
Euro to New Zealand Dollar (EUR/NZD): 2.004679 (+0.03%)
New Zealand Dollar to Dollar (NZD/USD): 0.559005 (-0.43%)
DAILY RECAP:
The Pound (GBP) continued to attract support at the start of this week, following last week’s impressive gains.
The recent upward revision to UK GDP growth in the second quarter, increased bets on a Bank of England (BoE) interest rate hike in November, and hopes of closer UK-EU ties following the Labour conference last week all continued to provide the Pound with support.
In addition, the UK’s finalised services PMI on Monday was revised slightly higher. The PMI printed at 52.1 in September, still down from August’s 52.5 but above the preliminary estimate of 51.7. While the upward revision was modest, it helped keep Sterling’s momentum alive.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) struggled as this week’s session began, with a gloomy market mood weighing on NZD demand.
Investors remained concerned about high global energy prices and the ongoing crisis in the Middle East.
Activity in the Strait of Hormuz came to a near standstill on Monday, following attacks near the vital waterway over the weekend.
Near-Term GBP/NZD Forecast: NZ Business Confidence to Support the ‘Kiwi’?
Looking ahead, the NZ Institute of Economic Research will publish its latest business confidence survey on Monday night. A forecast improvement in the third quarter could lend the ‘Kiwi’ support during Tuesday’s Asian session and into European trade.
Economic data then thins out, likely leaving GBP/NZD to be driven by market risk dynamics. Any shifts in sentiment could drive volatility. Federal Reserve interest rate expectations and US-Iran war news could determine the market mood.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar rate could remain elevated if risk appetite stays weak, although firmer New Zealand confidence may offer the Kiwi some support. The Pound New Zealand Dollar (GBP/NZD) exchange rate hit a ten-year high last week, as a risk-off mood and downbeat data weighed on the ‘Kiwi’.
At the time of writing, GBP/NZD traded at NZ$2.3584, up over 0.8% on the week, having hit its highest level since November 2015.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.359508 (+0.06%)
Euro to New Zealand Dollar (EUR/NZD): 2.006451 (+0.11%)
New Zealand Dollar to Dollar (NZD/USD): 0.561239 (-0.04%)
DAILY RECAP:
The Pound (GBP) enjoyed broad support at the start of the week as comments from Bank of England (BoE) Deputy Governor Dave Ramsden strengthened expectations of an interest rate hike in November.
Sterling then traded without a clear direction amid a lack of UK economic data, with Prime Minister Andy Burnham’s Labour conference speech doing little to move the currency.
The Pound regained momentum midweek after an upward revision to UK GDP showed the economy grew by 0.5% in the second quarter, reinforcing expectations of a November rate hike.
GBP wavered on Thursday as the UK’s final manufacturing PMI was revised slightly lower, although the index continued to signal an improvement in factory activity.
However, Sterling closed the week on a positive footing, supported by Burnham’s remarks on resetting UK-EU relations and the possibility of rejoining the bloc.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) was steady at the start of the week as the US and China agreed to extend their trade truce until 2027.
However, the ‘Kiwi’ came under pressure as the week went on, with market sentiment souring. Rising oil prices and fears of further interest rate hikes from central banks around the world weighed on risk appetite.
Softer New Zealand data throughout the week also exposed NZD to losses. On Wednesday, September’s business confidence index pointed to an unexpected decline.
Similarly, the consumer confidence index on Friday missed forecasts to show a deterioration in September.
Near-Term GBP/NZD Forecast: Risk Appetite in Focus Looking ahead, economic data is thin on the ground this week, with just two data releases on Monday.
For the Pound, the UK’s final services PMI could impact Sterling. Confirmation of a slowdown in September may dent GBP.
As for the ‘Kiwi’, an anticipated improvement in New Zealand business confidence in the third quarter could support the currency.
For the rest of the week, market risk appetite could be the defining factor for GBP/NZD movement. If markets remain risk off, the Pound could stay strong against the New Zealand Dollar.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could remain volatile as UK GDP, New Zealand confidence data and wider risk sentiment shape the pair. The Pound New Zealand Dollar (GBP/NZD) exchange rate was volatile last week, rising to a six-day high before sliding to a nine-day low.
At the time of writing, GBP/NZD traded at NZ$2.3383, virtually unchanged on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.338311 (+0.10%)
Euro to New Zealand Dollar (EUR/NZD): 2.011123 (0.00%)
New Zealand Dollar to Dollar (NZD/USD): 0.566475 (+0.17%)
DAILY RECAP:
The pound (GBP) started the week on the back foot as UK consumer confidence fell to a three-year low, with households increasingly concerned about the prospect of higher interest rates and potential tax hikes.
Sterling then wavered as a surge in UK government borrowing in August weighed on sentiment. However, better-than-forecast manufacturing data and falling oil prices helped GBP avoid further losses.
The pound came under further pressure midweek after the UK’s services PMI slowed more than expected in September, with the survey falling to 51.7 from 52.5 in August.
GBP remained subdued as signs of weakening consumer spending emerged, with the latest Confederation of British Industry’s (CBI) distributive trades survey reporting record-low retail order volumes in September.
However, Sterling regained some ground at the end of the week after Bank of England (BoE) Governor Andrew Bailey said elevated energy prices made it harder for the central bank to avoid raising interest rates.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) started last week’s session off on the back foot amid an anxious market mood.
After striking a six-day low against the Pound, the ‘Kiwi’ then rallied. Reserve Bank of New Zealand (RBNZ) Governor Anna Breman warned that the recent rise in oil prices would likely lead to higher inflation, fuelling bets for further interest rate hikes.
However, NZD trimmed its gains as the week went on, with ongoing risk aversion weighing on the currency.
Although risk appetite picked up towards the end of the week, a slight dovish repricing of RBNZ bets subdued the ‘Kiwi’.
Near-Term GBP/NZD Forecast: Risk Appetite to Drive the Pairing? Looking ahead, fresh UK economic data is thin on the ground this week, with the only key British data being the finalised GDP figures and manufacturing PMI.
The GDP data on Wednesday is expected to show that the UK economy slowed in the second quarter but remained relatively healthy. If the figures are revised lower or higher, Sterling could slip or strengthen, respectively.
Meanwhile, the final manufacturing PMI could lend GBP modest support on Thursday if it confirms an improvement in activity in September.
As for the ‘Kiwi’, a forecast improvement in New Zealand business confidence could support NZD exchange rates on Wednesday morning.
On Thursday evening, the latest consumer confidence index is also out. No change is expected, but any surprise results may drive volatility.
Finally, risk sentiment will continue to influence the risk-sensitive New Zealand Dollar, and could potentially be the main driver of GBP/NZD movement. Could hopes for a deal to reopen the Strait of Hormuz cheer markets and boost the ‘Kiwi’?
Pound-New Zealand Dollar could face further pressure if UK PMIs disappoint, while RBNZ inflation concerns may continue to support the Kiwi. The Pound to New Zealand Dollar (GBP/NZD) exchange rate was knocked on Tuesday, as the Reserve Bank of New Zealand’s (RBNZ) issued a fresh warning regarding inflation.
At the time of writing, GBP/NZD was trading at around NZ$2.3314. Down around 0.3% from the start of Tuesday's session.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.333482 (-0.33%)
Euro to New Zealand Dollar (EUR/NZD): 2.000976 (-0.33%)
New Zealand Dollar to Dollar (NZD/USD): 0.57253 (+0.27%)
DAILY RECAP:
The New Zealand dollar (NZD) initially slipped to a new multi-week low during Tuesday's overnight session, before rebounding sharply, following comments from Reserve Bank of New Zealand Governor Anna Breman.
Breman raised fresh concern about the inflationary pressures posed by the recent spike in oil prices, warning that if higher energy costs endure, near-term inflation could come in above the bank's latest forecasts.
The comments offered some support to the New Zealand Dollar, as the prospect of stronger-than-expected inflation places more pressure on the RBNZ to raise rates more quickly, having signalled at its September meeting that it would pursue a gradual pace of tightening than markets had expected.
However, NZD's recovery was subsequently tempered at the start of the European trading session as demand for the 'kiwi' was undermined by growing risk aversion.
The Pound (GBP) came under modest selling pressure on Tuesday after UK public sector borrowing significantly exceeded expectations in August, adding to concerns over the government’s already limited fiscal headroom ahead of the upcoming Budget.
According to data published by the Office for National Statistics (ONS), public sector net borrowing climbed by £18.3bn in August, smashing forecasts it would only reach £15.7bn.
The latest figures provided an unwelcome reminder of the challenges facing Chancellor John Healey, who will have even less room to manoeuvre in his upcoming Autumn Budget.
Near-Term GBP/NZD Forecast: Sterling to Stumble on Weaker PMIs? Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could face further headwinds in mid-week trade, with the publication of the UK's latest PMIs.
Both the manufacturing and services PMIs are forecast to report a moderation of growth in their respective sectors this month.
This is likely to sap Sterling sentiment, particularly if investors believe it might make the Bank of England (BoE) might be more hesitant to tighten monetary policy.
Meanwhile, in the absence of any notable NZD macroeconomic data, any movement in the 'kiwi' is likely to be tied to market risk dynamics, with the 'kiwi' potentially facing headwinds if sentiment continues to sour.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could stay supported if UK PMIs remain firm, while renewed risk aversion may keep the Kiwi under pressure. The Pound New Zealand Dollar (GBP/NZD) exchange rate rose to a two-month high last week amid widespread risk aversion but trimmed its gains slightly amid the Bank of England’s (BoE) interest rate decision.
At the time of writing, GBP/NZD traded at NZ$2.3406, up almost 0.6% on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.340439 (+0.36%)
Euro to New Zealand Dollar (EUR/NZD): 2.006889 (+0.16%)
New Zealand Dollar to Dollar (NZD/USD): 0.572315 (-0.07%)
DAILY RECAP:
The Pound (GBP) faced uncertain movement through the first half of last week’s session, although it was able to push higher against some of its weaker peers, as markets digested key UK data ahead of the BoE decision.
The first release was the UK’s latest jobs report on Tuesday. Although unemployment held steady rather than rising as forecast, the data contained signs of underlying weakness in the British labour market.
The Pound then softened on Wednesday as GBP investors seemed unimpressed by the UK’s latest inflation figures. Headline inflation rose from 2.9% to 3.1% in August, while core inflation held steady at 2.6%, with both measures in line with forecasts.
Thursday brought further headwinds as the BoE voted to leave interest rates unchanged following its September policy meeting. However, downside pressure was tempered by the central bank’s announcement that it would slow the pace of its bond sales, sending UK borrowing costs lower.
Finally, the Pound found fresh support on Friday as UK retail sales beat forecasts, recovering 0.5% in August following July’s 0.2% contraction. Markets had expected sales to fall by a further 0.5%.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) stumbled out the gate last week amid a souring market mood.
Escalating tensions in the Middle East weighed heavily on risk appetite, dragging the New Zealand Dollar to two-month lows against some currencies, including the Pound.
The ‘Kiwi’ attempted to recover in the latter part of the week, amid some dip-buying and better-than-expected New Zealand GDP figures.
However, persistent risk aversion left NZD to end the week lower overall.
Near-Term GBP/NZD Forecast: UK PMIs in the Spotlight Looking ahead, the Pound could face a test on Tuesday with the publication of the UK’s latest borrowing figures. A surge in borrowing in August could revive concerns about the UK’s fiscal position ahead of the Autumn Budget.
Attention then turns to the UK’s preliminary PMIs for September, due out on Wednesday. Another month of robust activity – particularly in the country’s vital services sector – could lend Sterling support.
Data is then thin on the ground through the remainder of the week, likely leaving the GBP/NZD exchange rate to trade on market risk dynamics. A risk-off mood could weigh heavily on the ‘Kiwi’.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could stay under pressure if UK retail sales disappoint, while firmer risk appetite may keep the Kiwi supported.
The Pound New Zealand Dollar (GBP/NZD) exchange rate stumbled on Thursday as the Bank of England (BoE) left interest rates unchanged.
At the time of writing, GBP/NZD traded at NZ$2.3302, down 0.5% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.32993 (-0.43%)
Euro to New Zealand Dollar (EUR/NZD): 2.002278 (-0.16%)
New Zealand Dollar to Dollar (NZD/USD): 0.573229 (+0.23%)
DAILY RECAP:
The New Zealand Dollar (NZD) strengthened during Thursday’s Asian trading session, recouping some of the losses it suffered on Wednesday evening, thanks in part to better-than-expected GDP figures.
New Zealand’s GDP growth rate for the second quarter printed at 0.2%, beating forecasts for 0.1%. First-quarter growth was also revised higher, from 0.8% to 0.9%.
While the data still showed a sharp slowdown in growth, NZD investors were heartened by the stronger-than-expected performance in the New Zealand economy.
Additionally, an improving mood lent the risk-sensitive ‘Kiwi’ some support.
Meanwhile, the Pound (GBP) was initially muted as GBP investors braced for the Bank of England’s interest rate decision.
Sterling then stumbled as the BoE held interest rates. While no change in policy was broadly expected, there had been the outside chance of a hike. In addition, the Monetary Policy Committee (MPC) remained split 6-3 in favour of holding rates, matching the previous meeting’s vote split.
GBP exchange rates struggled in the wake of the decision, particularly against the rallying New Zealand Dollar.
Near-Term GBP/NZD Forecast: Contracting UK Sales to Dent Sterling?
Looking ahead, the UK’s latest retail sales figures could influence the Pound at the end of the week.
Markets expect to see a 0.2% contraction in sales growth in August, following a 0.5% contraction in July. If the data meets forecasts, the decline in consumer spending could raise concerns about the health of the UK economy and thereby weigh on GBP.
Meanwhile, New Zealand data is thin on the ground. As a result, risk sentiment could drive NZD movement, with any shifts in the market mood potentially infusing the ‘Kiwi’ with volatility.
Exchange Rates UK Research
Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could remain elevated if UK inflation keeps BoE tightening expectations alive, while weaker New Zealand growth may weigh on the Kiwi. The Pound New Zealand Dollar (GBP/NZD) exchange rate hit a near two-month high last week as a risk-off mood weighed on the ‘Kiwi’.
At the time of writing, GBP/NZD traded at around NZ$2.3267, up 1.2% on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.328322 (+0.05%)
Euro to New Zealand Dollar (EUR/NZD): 1.996287 (+0.04%)
New Zealand Dollar to Dollar (NZD/USD): 0.580943 (-0.06%)
DAILY RECAP:
The Pound (GBP) enjoyed a steady start to the week amid a speech from Chancellor John Healey. In his first major address, he focused on boosting growth and reassuring markets that he would take a responsible approach to the public finances. This lent GBP modest support.
Sterling then traded without a clear direction through much of the week as UK data was thin on the ground, although it was able to rise against its more risk-sensitive peers amid a cautious market mood.
On Friday, the UK’s latest GDP figures beat forecasts to show a healthy 0.3% expansion in July. This helped GBP stay afloat, although it failed to prompt a notable upside.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) came under pressure at the start of the week amid intensifying tensions in the Middle East.
Fresh attacks between Iran and the US rattled markets, with oil prices surging back above $100 per barrel, raising concerns that the crisis could escalate once again.
After hitting a near two-month low against the Pound, the New Zealand Dollar attempted to recover amid some dip-buying.
However, the prevailing risk-off mood kept NZD in check.
Near-Term GBP/NZD Forecast: BoE Decision in the Spotlight Looking ahead, the first key data release this week is the UK’s latest labour market overview. A forecast rising of unemployment in the three months to July could pressure the Pound, particularly if it's paired with a cooling of wage growth.
The British consumer price index on Wednesday could then lift Sterling. Markets expect to see headline and core inflation rising in August, with the former forecast to climb from 2.9% to 3.1%.
The main event, however, may be the Bank of England's (BoE) interest rate decision. No change is expected, leaving the focus on forward guidance. A cautious tone from the bank could undermine the Pound, while a hawkish shift could boost GBP. The employment and inflation data during the first half of the week could shape the BoE’s tone.
Finally for the Pound, a forecast contraction in UK retail sales in August could weigh on GBP on Friday.
Meanwhile, the key economic data release for NZD will be New Zealand’s second-quarter GDP figures. An expected slowdown in growth could sap demand for the ‘Kiwi’.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar could come under pressure if UK GDP stalls, although a weaker New Zealand PMI may limit support for the Kiwi. The Pound New Zealand Dollar (GBP/NZD) exchange rate retreated from Wednesday's one-week high on Thursday, as the ‘Kiwi’ attracted some dip-buying.
At the time of writing, GBP/NZD traded at NZ$2.3172, down marginally from the previous day’s close.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.331018 (+0.55%)
Euro to New Zealand Dollar (EUR/NZD): 2.00304 (+0.61%)
New Zealand Dollar to Dollar (NZD/USD): 0.579551 (-0.84%)
DAILY RECAP:
After touching one-week lows against many of its peers on Wednesday evening, the New Zealand Dollar (NZD) managed to crawl up from its worst levels on Thursday.
The upside came from some dip-buying, as price-conscious investors sought to pick up a bargain on NZD.
Traders were also unperturbed by a mixed market mood, with the risk-sensitive currency able to recoup losses despite a broader lack of risk appetite.
Meanwhile, the Pound (GBP) found itself subdued on Thursday as the ongoing lack of UK economic data kept the currency confined to a narrow range.
Movement in Sterling was also muted by the looming UK GDP figures, with GBP investors seeming reluctant to alter their positions ahead of the week’s key economic release.
Near-Term GBP/NZD Forecast: Stalling UK GDP to Dent Sterling? Looking ahead, the UK’s latest GDP figures are in focus for GBP investors on Friday.
Markets expect growth to have stalled in July. Such a lacklustre start to the third quarter could weigh on the Pound, as it would raise fresh concerns about the health of the British economy and potentially dampen Bank of England (BoE) interest rate hike bets.
As for NZD, New Zealand's latest manufacturing PMI is due out on Thursday night. A decent reading could lend the ‘Kiwi’ support through Friday’s Asian trade session.
Risk appetite will likely also influence the currency, with the New Zealand Dollar potentially struggling if an anxious market mood prevails.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could stay supported if Healey reassures bond markets, although softer UK GDP risks limiting Sterling’s recovery. The Pound New Zealand Dollar (GBP/NZD) exchange rate briefly hit a seven-week high last week as the ‘Kiwi’ tumbled following the Reserve Bank of New Zealand’s (RBNZ) interest rate decision, although Sterling struggled to sustain its upside.
At the time of writing, GBP/NZD traded at NZ$2.2988, up 0.4% on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.299609 (+0.04%)
Euro to New Zealand Dollar (EUR/NZD): 1.975009 (0.00%)
New Zealand Dollar to Dollar (NZD/USD): 0.587861 (-0.03%)
DAILY RECAP:
The New Zealand Dollar (NZD) edged lower through the start of the week as an anxious mood dampened the risk-sensitive currency’s appeal.
The ‘Kiwi’ then took a tumble on Wednesday in the wake of the RBNZ’s interest rate decision. Although the bank hiked rates by 25 basis points, as expected, the accompanying commentary said that a rate hike this month reduced the likelihood of bigger increases later in the year.
Through the second half of the week, the New Zealand Dollar managed to regain some ground as market sentiment improved.
Meanwhile, the Pound (GBP) was muted on Monday due to a UK bank holiday before facing mixed movement on Tuesday. An uptick in Bank of England (BoE) interest rate hike bets supported Sterling, but surging bond yields unsettled GBP investors.
The Pound struggled against its stronger peers on Wednesday as gilt yields rose again, hitting a 19-year high. However, GBP was able to climb against the weaker NZD.
Bond market jitters eventually saw Sterling surrender some of its gains on Thursday, while a weaker-than-expected final services PMI also dented GBP.
By the end of the week, however, the Pound did remain slightly up against the ‘Kiwi’ Dollar.
Near-Term GBP/NZD Forecast: UK GDP in Focus Looking ahead, UK Chancellor John Healey is expected to deliver his first major speech on Monday, with the market response potentially driving notable movement in the Pound.
Healey will likely focus on how to support the country’s fragile economic growth, while also wanting to encourage bond markets that he will stick to the government’s fiscal rules.
A positive reception to his speech could lift GBP, while Sterling could stumble if the speech falls flat or if Healey spooks the bond market.
The key UK data release for the week will be the latest GDP figures on Friday. If the British economy slowed in July, as expected, the Pound could end the week on the back foot.
Meanwhile, New Zealand’s latest manufacturing PMI is due on Thursday. A slight slowdown in factory activity in August could mute NZD.
Elsewhere, market risk appetite could influence the ‘Kiwi’, with any shifts potentially driving volatility.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound-New Zealand Dollar rate could hold above NZ$2.30 if the Kiwi remains pressured by dovish RBNZ guidance, although cautious BoE signals may weigh on Sterling. The Pound to New Zealand Dollar (GBP/NZD) exchange rate jumped to a six-week high on Wednesday in the wake of the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision.
At the time of writing, GBP/NZD was trading at around NZ$2.3189. Up around 1.1% from the start of Wednesday's session.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.310327 (+0.76%)
Euro to New Zealand Dollar (EUR/NZD): 1.985161 (+0.94%)
New Zealand Dollar to Dollar (NZD/USD): 0.583857 (-0.94%)
DAILY RECAP:
The New Zealand dollar (NZD) plunged on Wednesday despite the Reserve Bank of New Zealand (RBNZ) delivering another interest rate hike,
The RBNZ raised its Official Cash Rate (OCR) by 25 basis points to 2.75%, following its September policy meeting, marking its second consecutive hike after raising rates in July.
However, as the decision itself was widely anticipated, much of the subsequent market reaction centred on the RBNZ’s forward guidance.
This saw the 'Kiwi' tumble as policymakers suggested that hiking this month reduces the risk that the OCR needs to rise again later.
While able to roar higher against the New Zealand Dollar, the Pound (GBP) was left muted against most of its other peers on Wednesday.
Sterling sentiment was muted amid a continued rise in UK borrowing costs, with UK 10-year yields hitting their highest levels since 2008, while 30-year yields climbed to a 28-year high.
The rise in borrowing costs is not unique to the UK, with global bond yields surging over the past couple of days amid growing inflation concerns and expectations for further monetary tightening from central banks.
However, the rise in UK borrowing costs is particularly concerning as the government prepares to deliver its Autumn Budget next month, reducing the amount of fiscal headroom that Chancellor John Healey has to work with.
Near-Term GBP/NZD Forecast: Focus Shifts to BoE Bailey Turning to the second half of the week, the next key catalyst of movement for the Pound to New Zealand Dollar (GBP/NZD) exchange rate will be a scheduled speech by Bank of England (BoE) Governor Andrew Bailey on Friday.
Fresh global inflation concerns have recently bolstered expectations the BoE will tighten monetary policy later in the year.
However, Bailey has previously been cautious in regard to potential rate hikes, which could place significant pressure on the Pound later in the week if he strikes a similar tone.
Meanwhile, the fallout from the RBNZ's rate decision as well as global bond market jitters could see the 'Kiwi' languish through the latter half of the week.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could face further pressure if the RBNZ raises rates, while cautious BoE signals may leave Sterling vulnerable. The Pound New Zealand Dollar (GBP/NZD) exchange rate was volatile last week, with the pairing eventually sliding to a 12-week low.
At the time of writing, GBP/NZD traded at NZ$2.2824, virtually unchanged on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.288956 (+0.22%)
Euro to New Zealand Dollar (EUR/NZD): 1.958837 (+0.07%)
New Zealand Dollar to Dollar (NZD/USD): 0.591274 (-0.68%)
DAILY RECAP:
The Pound (GBP) attracted some support on Monday after an analysis from the Resolution Foundation thinktank suggested that UK productivity may have improved in recent years, rather than weakening.
Sterling then fluctuated, as a lack of data left it exposed to volatility.
After GBP/NZD touched a five-day high midweek, the Pound then retreated. The Confederation of British Industry’s (CBI) latest distributive trades survey came in worse than expected, while rising energy bills raised cost-of-living concerns.
With UK data thin through the latter part of the week, Sterling moved without a clear direction.
Meanwhile, the New Zealand Dollar (NZD) stumbled at the start of the week after New Zealand reported a surprise contraction in retail sales in the second quarter.
The risk-sensitive ‘Kiwi’ faced further pressure as the week went on, with a risk-off mood and domestic political uncertainty both pressuring the currency.
However, an improving market mood helped the New Zealand Dollar regain ground through the second half of the week.
Near-Term GBP/NZD Forecast: RBNZ Rate Hike to Lift the ‘Kiwi’? Looking ahead, the focus for NZD investors this week will be the Reserve Bank of New Zealand’s (RBNZ) interest rate decision during Wednesday’s Asian trading session. A rate hike from the central bank could boost the ‘Kiwi’.
The New Zealand Dollar could then trim its gains on Thursday night, if the latest ANZ consumer confidence index shows a deterioration in morale in August.
As for the Pound, the UK’s final services PMI could influence Sterling on Thursday. If it confirms an improvement in activity in August, the British currency could climb.
A speech from Bank of England (BoE) Governor Andrew Bailey could then affect GBP on Friday, with the Pound potentially struggling if the BoE chief remains cautious about the need for further rate hikes.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could extend above NZ$2.30 if UK growth holds firm, although stronger RBNZ rate expectations may help the Kiwi recover. The Pound to New Zealand Dollar (GBP/NZD) exchange rate climbed to a two-week high on Thursday as deteriorating global risk appetite weighed on the risk-sensitive ‘Kiwi’.
At the time of writing, GBP/NZD was trading around NZ$2.3044, up approximately 0.3% from Wednesday's opening levels.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.3051 (+0.30%)
Euro to New Zealand Dollar (EUR/NZD): 1.968098 (+0.22%)
New Zealand Dollar to Dollar (NZD/USD): 0.586233 (-0.27%)
DAILY RECAP:
The New Zealand Dollar (NZD) came under pressure as a deterioration in global risk sentiment weighed on the risk-sensitive currency.
Investor confidence weakened amid growing concerns that US-Iran ceasefire negotiations had reached an impasse.
Despite previous optimism from US officials that an agreement could be days away, recent rhetoric from Tehran and remarks from US President Donald Trump suggested the two sides remained at odds in several areas.
The prospect of a prolonged closure of the Strait of Hormuz pushed global oil prices back towards US$90 per barrel and weighed on the ‘Kiwi’ as traders rotated away from higher-risk assets and towards traditional safe havens.
Meanwhile, while the Pound (GBP) appreciated against the New Zealand Dollar, it traded sideways against most of its other major peers.
In the continued absence of notable UK economic releases, Sterling struggled to find fresh impetus.
GBP sentiment was also subdued by analysis from the Verdant thinktank suggesting that multiple heatwaves have cost the UK economy US$4bn in lost output so far this year.
Near-Term GBP/NZD Forecast: Improving Risk Appetite to Underpin the ‘Kiwi’? Looking ahead, the UK's latest GDP figures are expected to provide the next major catalyst for the Pound to New Zealand Dollar exchange rate.
The preliminary estimate for second-quarter growth is forecast to show the UK economy expanded by 0.4%, down from 0.6% in the first quarter.
Although slower than at the start of the year, a 0.4% expansion would still represent a healthy pace of growth and could extend Sterling's upside if investors see it as encouraging the Bank of England to tighten monetary policy later this year.
Meanwhile, the ‘Kiwi’ could receive support if an increase in New Zealand business inflation expectations strengthens Reserve Bank of New Zealand rate hike bets.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Pound-New Zealand Dollar could extend its recovery if weaker New Zealand labour market data continues to dampen RBNZ rate expectations, although improving risk sentiment may support the Kiwi. The Pound to New Zealand Dollar (GBP/NZD) exchange rate rebounded from a two-month low on Wednesday after weaker-than-expected New Zealand employment figures weighed on the ‘Kiwi’.
At the time of writing, GBP/NZD was trading around NZ$2.2944, up approximately 0.5% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.289981 (0.00%)
Euro to New Zealand Dollar (EUR/NZD): 1.963768 (+0.02%)
New Zealand Dollar to Dollar (NZD/USD): 0.587895 (+0.09%)
DAILY RECAP:
The New Zealand Dollar (NZD) retreated during Wednesday's Asian session after weaker-than-expected labour market data prompted investors to reassess expectations for further Reserve Bank of New Zealand (RBNZ) interest rate hikes.
Official figures showed New Zealand's unemployment rate climbed to 5.6% in the second quarter, its highest level in more than a decade and above forecasts for a rise to 5.4%.
The report also showed wage growth remained subdued, suggesting underlying domestic inflation pressures may be easing.
The figures came only weeks after stronger-than-expected inflation data had encouraged speculation that the RBNZ could continue tightening monetary policy.
However, the deterioration in employment conditions prompted investors to scale back some of those hawkish expectations, leaving the ‘Kiwi’ under pressure despite a broader improvement in risk appetite following renewed optimism over the reopening of the Strait of Hormuz.
Meanwhile, the Pound (GBP) strengthened following the publication of the UK's latest services PMI.
July's final reading was revised higher from the preliminary estimate, confirming the UK's dominant services sector rebounded strongly after June's slowdown.
The stronger survey reinforced expectations that the UK economy remains resilient, potentially allowing the Bank of England (BoE) to keep the option of further policy tightening on the table later in 2026.
Near-Term GBP/NZD Forecast: Improving Risk Appetite to Underpin the Kiwi? Looking ahead, the Pound to New Zealand Dollar exchange rate may struggle to build on Wednesday's gains if market sentiment continues to improve.
Any agreement to reopen the Strait of Hormuz could encourage investors back into risk-sensitive assets and help the New Zealand Dollar recover.
Conversely, renewed geopolitical tensions or fresh US threats towards Iran could weigh on risk appetite and provide further support for GBP/NZD.
With little UK economic data scheduled through the remainder of the week, Sterling may struggle to establish a strong independent direction.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell to a six-week low last week before recovering as UK political developments, high-impact economic data and the escalating US-Iran conflict drove volatility.
At the time of writing, GBP/NZD was trading at NZ$2.3020, virtually unchanged over the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.299017 (-0.09%)
Euro to New Zealand Dollar (EUR/NZD): 1.962339 (-0.07%)
New Zealand Dollar to Dollar (NZD/USD): 0.580926 (+0.32%)
DAILY RECAP:
The Pound (GBP) wobbled at the start of the week as markets were caught off guard by Prime Minister Andy Burnham’s surprise choice for Chancellor. Burnham appointed former Defence Secretary John Healey as head of the Treasury.
Sterling then began to trend lower amid concerns about the government’s commitment to fiscal discipline as Burnham started to outline plans to cut some taxes.
Political developments overshadowed several high-impact UK economic releases, including the latest labour market report and consumer price index.
The CPI figures were mixed and failed to prompt decisive movement in the Pound. Headline inflation cooled more than forecast, easing from 2.8% to 2.6%, while core inflation unexpectedly held at 2.6% rather than slowing to 2.5%.
While GBP was able to recover against riskier currencies as the market mood soured, it struggled elsewhere.
Strong data on Friday also failed to boost Sterling, with UK retail sales in June and the services PMI for July both unexpectedly accelerating.
Meanwhile, the New Zealand Dollar (NZD) strengthened at the start of the week, shrugging off weaker-than-forecast trade figures and escalating tensions in the Middle East.
The ‘Kiwi’ then extended its gains as New Zealand inflation exceeded expectations, accelerating from 3.1% to 4.1% in the second quarter. This fuelled bets on further interest rate increases from the Reserve Bank of New Zealand (RBNZ).
After striking a six-week high against the Pound on Tuesday, the New Zealand Dollar retreated through the remainder of the week.
With the crisis in the Middle East intensifying, a deeply risk-averse market mood weighed heavily on NZD and allowed GBP/NZD to recover.
Near-Term GBP/NZD Forecast: BoE Interest Rate Decision in Focus Looking ahead, the Bank of England’s interest rate decision on Thursday is in the spotlight for GBP investors this week.
The Bank is expected to hold interest rates steady, which would leave markets focused on the BoE’s forward guidance.
If policymakers indicate that rate hikes remain likely in the coming months, particularly following the recent rise in energy prices, Sterling could strengthen.
Ahead of the decision, political developments could continue to drive volatility in the Pound.
As for the New Zealand Dollar, the latest business and consumer confidence indexes could influence NZD, with the releases due overnight on Wednesday and Thursday, respectively.
If morale among businesses and consumers deteriorated in July, the ‘Kiwi’ could weaken.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate slipped to a one-month low on Tuesday after stronger-than-expected New Zealand inflation reinforced expectations for further Reserve Bank of New Zealand interest rate hikes.
At the time of writing, GBP/NZD was trading around NZ$2.2939, down approximately 0.2% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.295692 (+0.02%)
Euro to New Zealand Dollar (EUR/NZD): 1.956495 (+0.29%)
New Zealand Dollar to Dollar (NZD/USD): 0.5827 (-0.43%)
DAILY RECAP:
The New Zealand Dollar (NZD) appreciated through Tuesday's Asian trading session as markets digested New Zealand's latest consumer price index.
According to the CPI figures published by Stats NZ, annual inflation accelerated to 4.1% in the second quarter, up from 3.1% previously and above market forecasts of 4.0%.
Perhaps more importantly, the Q2 inflation print also outpaced the Reserve Bank of New Zealand’s previous 3.9% forecast.
This prompted NZD investors to increase their bets on further monetary tightening after the RBNZ's recent decision to lift the Official Cash Rate to 2.5%.
However, the ‘Kiwi’ was unable to sustain its best levels for long, with NZD exchange rates falling back by the start of the European session as market risk appetite was sapped by the continued escalation of tensions in the Middle East.
Meanwhile, trade in the Pound (GBP) was broadly flat on Tuesday as the UK's latest jobs report helped to calm concerns over turbulence in the UK bond market at the start of the session.
The Office for National Statistics (ONS) reported that unemployment held steady at 4.9% in May, against forecasts it would rise to 5.0%, while employment growth accelerated from 100,000 to 147,000 against consensus estimates it would drop to 85,000.
The surprisingly robust jobs data was welcomed by GBP investors as it increased the chances of the Bank of England (BoE) tightening monetary policy later in the year.
However, Sterling's upside potential remained capped after the start of Andy Burnham's premiership triggered a rise in UK gilt yields as he signalled his willingness to exercise flexibility while still adhering to fiscal rules.
Near-Term GBP/NZD Forecast: Slowdown in UK Inflation to Sap Sterling? Looking ahead, the next catalyst for the Pound to New Zealand Dollar exchange rate will be the UK's latest inflation figures.
Economists expect UK inflation to have cooled further in June, with Sterling likely to come under pressure if the data weakens expectations for further Bank of England interest rate hikes.
Meanwhile, the ‘Kiwi’ could face headwinds if New Zealand's latest credit card spending figures point to a slowdown in consumer spending last month.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell to a three-week low last week as strong domestic data and rising Reserve Bank of New Zealand rate hike expectations helped the ‘Kiwi’ outperform Sterling.
At the time of writing, GBP/NZD was trading at NZ$2.3052, down around 0.8% on the week.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.302862 (-0.19%)
Euro to New Zealand Dollar (EUR/NZD): 1.957782 (-0.08%)
New Zealand Dollar to Dollar (NZD/USD): 0.58422 (+0.02%)
DAILY RECAP:
The Pound (GBP) was subdued at the start of the week amid a lack of UK economic data.
Comments from Bank of England Governor Andrew Bailey also pressured the Pound, as the BoE chief raised concerns about the UK’s long-running problem with sluggish growth.
Sterling rallied midweek amid speculation around who would become Chancellor under incoming Prime Minister Andy Burnham.
Shabana Mahmood overtook Ed Miliband as the frontrunner, with markets welcoming the news as Mahmood is seen as more fiscally responsible.
However, GBP couldn’t sustain its upside, even with UK GDP showing a 0.1% rebound in May.
Investors moved to book their profits in the Pound after it struck multi-month highs against some of its peers, sending Sterling lower.
Meanwhile, the New Zealand Dollar (NZD) started strong last week, building on the previous week’s gains, as domestic data continued to underpin the ‘Kiwi’.
New Zealand’s June services PMI exceeded forecasts, reporting an unexpected expansion in the sector.
In addition, business confidence in the country rebounded 8% in the second quarter, rather than deteriorating.
The risk-sensitive currency relinquished some gains in the middle of the week as escalating tensions in the Middle East soured the market mood.
However, the ‘Kiwi’ was able to find its footing again to end the week with most of its gains intact, as markets continued to price in more interest rate hikes from the Reserve Bank of New Zealand (RBNZ) following the recent strong domestic data.
Near-Term GBP/NZD Forecast: High-Impact Data to Drive Volatility? Looking ahead, the first major data release this week will be New Zealand’s second-quarter inflation figures. If inflation accelerated as expected, the ‘Kiwi’ could be buoyed by RBNZ rate hike bets.
The focus then shifts to GBP data, with the UK’s latest jobs report to be published on Tuesday. Signs that the labour market has stopped softening – such as steady unemployment and wage growth – could boost the Pound.
The UK consumer price index on Wednesday could then dent GBP, if it shows that headline inflation eased in June.
Finally, Friday brings the UK’s June retail sales figures and preliminary PMIs for July. A slowdown in sales last month and another contraction in service sector activity this month could see Sterling end the week on a sour note.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate opens the new week around 2.3239 after slipping to its lowest level in almost two weeks, with the New Zealand Dollar continuing to outperform as markets respond to a more hawkish Reserve Bank of New Zealand.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.323928 (-0.10%)
Euro to New Zealand Dollar (EUR/NZD): 1.979635 (-0.06%)
New Zealand Dollar to Dollar (NZD/USD): 0.576117 (-0.03%)
WEEKLY RECAP:
GBP/NZD drifted lower through the second half of last week after failing to hold above the 2.35 level.
Sterling remained broadly supported.
Markets continue to expect the Bank of England to proceed cautiously on interest rates despite signs that UK growth has moderated.
Recent UK inflation data remains above target, helping to underpin the Pound even as business surveys point to a softer economy.
In its latest FX briefing, ING noted that Sterling continues to trade primarily on domestic economic and political developments rather than broad US Dollar moves.
The New Zealand Dollar has strengthened.
The Reserve Bank of New Zealand surprised markets last week by raising the Official Cash Rate and signalling that inflation risks linked to the Middle East energy shock and a stronger domestic economy warranted a tighter policy stance.
Governor Anna Breman also highlighted evidence that the economic recovery is gathering momentum, supported by exports, tourism and improving business confidence.
MUFG said in its latest weekly outlook that New Zealand interest-rate expectations have shifted materially higher, with investors continuing to price additional tightening before year-end.
The improving outlook for the Kiwi Dollar has coincided with a broader recovery in global risk appetite, encouraging demand for higher-yielding currencies.
Near-Term GBP/NZD Forecast: China GDP and New Zealand Business Confidence in Focus For Pound Sterling, attention this week turns to Thursday's UK monthly GDP estimate for May, together with industrial production, manufacturing production and trade balance figures.
Stronger-than-expected data would reinforce confidence that the UK economy is proving more resilient than recent business surveys suggest.
For the New Zealand Dollar, the focus will be on Wednesday's Q2 NZIER Survey of Business Opinion, retail card spending, house price data and remarks from the RBNZ's Chief Economist.
Investors will also pay close attention to China's second-quarter GDP, industrial production and retail sales, given China's importance as New Zealand's largest export market.
A stronger Chinese growth report and another improvement in New Zealand business confidence would likely provide further support for the Kiwi Dollar.
However, if UK GDP surprises to the upside while Chinese data disappoints, GBP/NZD could rebound towards 2.35.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell sharply on Wednesday after the Reserve Bank of New Zealand delivered a widely anticipated interest rate hike and maintained a hawkish policy outlook.
At the time of writing, GBP/NZD was trading at NZ$2.3424, down around 0.4% on the day.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.350921 (-0.03%)
Euro to New Zealand Dollar (EUR/NZD): 2.004614 (-0.22%)
New Zealand Dollar to Dollar (NZD/USD): 0.568748 (+0.22%)
DAILY RECAP:
The New Zealand Dollar (NZD) leapt higher during Wednesday’s Asian trading session after the RBNZ announced its latest interest rate decision.
The bank raised interest rates by 25 basis points, bringing the official cash rate to 2.5%. Markets had expected around a 70% probability of a rate hike, with the decision providing NZD with notable support.
In addition, the bank also indicated that further rate hikes remain on the table. This hawkish tone further boosted the New Zealand Dollar’s appeal.
However, a risk-off market mood saw NZD trim its gains. Escalating tensions between the US and Iran limited the risk-sensitive currency’s appeal.
Meanwhile, the Pound (GBP) struggled to attract support on Wednesday, as a lack of UK economic data left Sterling without much impetus.
The increasingly risk-sensitive British currency weakened against its safer rivals amid a risk-off market mood. However, the anxious tone among investors helped Sterling to recoup some losses against the more risk-sensitive New Zealand Dollar.
Near-Term GBP/NZD Forecast: New Zealand PMI to Weigh on the ‘Kiwi’? Looking ahead, New Zealand’s latest manufacturing PMI could weigh on NZD on Wednesday night. Markets expect the June index to weaken for the sixth consecutive month and reveal the second consecutive contraction in factory activity.
Meanwhile, market risk appetite could also influence the ‘Kiwi’. If tensions continue to escalate in the Middle East, a souring market mood could weigh on the risk-sensitive New Zealand Dollar, potentially prompting it to surrender some of its post-RBNZ gains.
As for the Pound, the nominations for the Labour leadership will open on Thursday. If no other candidates step forward to challenge frontrunner Andy Burnham, Sterling may remain stable.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fell sharply on Wednesday after the Reserve Bank of New Zealand (RBNZ) raised its Official Cash Rate by 25 basis points to 2.50%, boosting the 'Kiwi' as policymakers struck a more hawkish tone than many investors had anticipated.
At the time of writing, GBP/NZD was trading at NZ$2.3369, down around 0.6% on the day after retreating from recent six-month highs.
Latest — Exchange Rates:
Pound to New Zealand Dollar (GBP/NZD): 2.337366 (-0.61%)
Euro to New Zealand Dollar (EUR/NZD): 1.99811 (-0.54%)
New Zealand Dollar to Dollar (NZD/USD): 0.571431 (+0.70%)
DAILY RECAP:
The New Zealand Dollar (NZD) rallied after the Reserve Bank of New Zealand increased the Official Cash Rate by 25 basis points to 2.50%, marking the first increase in the current tightening cycle.
Importantly, the decision was reached by consensus, with both the Reserve Bank's internal members and external Monetary Policy Committee members backing the rate increase after the previous meeting ended in a split vote.
The Committee said monetary policy remains stimulatory and that a modest reduction in that stimulus was appropriate to help ensure inflation returns sustainably to the 2% midpoint of its target range. Policymakers also acknowledged that inflation risks remain elevated despite lower oil prices and easing geopolitical tensions.
The prospect of further policy tightening later this year helped lift New Zealand government bond yields and supported the 'Kiwi' across the currency market.
Meanwhile, the Pound (GBP) struggled to offset the New Zealand Dollar's gains.
Sterling remained broadly supported by expectations that UK interest rates will stay relatively elevated, but the RBNZ's surprise consensus behind a rate increase proved the dominant driver of GBP/NZD price action.
Near-Term GBP/NZD Forecast: Focus Turns to the RBNZ's Next Move Following Wednesday's widely expected 25 basis point increase, investors will now focus on whether the Reserve Bank of New Zealand signals additional policy tightening in the months ahead.
While policymakers stressed that future decisions will remain data dependent, the consensus vote and accompanying statement suggest the Committee remains concerned about inflation risks and is prepared to tighten further if necessary.
If markets continue to price in another RBNZ rate increase later this year, the New Zealand Dollar could remain well supported.
For Sterling, attention will remain on incoming UK economic data and Bank of England expectations, although the near-term direction of GBP/NZD is likely to be driven primarily by changing interest rate expectations between the two central banks.
