Pound To New Zealand Dollar Price Forecast: Kiwi Surges As Risk Appetite Improves

The Pound New Zealand Dollar (GBP/NZD) exchange rate was highly volatile last week, surging to a multi-month high before tumbling as a US-Iran ceasefire triggered a sharp improvement in market sentiment.

WEEKLY RECAP:

The New Zealand Dollar (NZD) initially weakened amid fears of an escalation in the Middle East, with investors shunning risk-sensitive currencies.

However, sentiment shifted dramatically following the announcement of a two-week ceasefire between the US and Iran.

The agreement triggered a strong risk-on rally, boosting demand for the ‘Kiwi’.

Additional support came from the Reserve Bank of New Zealand, which struck a hawkish tone at its latest policy decision, reinforcing expectations for further tightening if inflation pressures persist.

Although NZD trimmed some gains towards the end of the week as doubts emerged over the ceasefire’s durability, it remained stronger overall.

Meanwhile, the Pound (GBP) lacked clear direction.

Sterling was subdued early in the week amid thin trading conditions and mixed UK services PMI data.

Midweek, GBP traded in a wide range, strengthening against safer currencies but weakening against risk-sensitive peers following the ceasefire announcement.

Later in the week, a rise in UK bond yields weighed on Sterling, reviving concerns about government borrowing costs.

While GBP recovered some ground amid renewed ceasefire uncertainty, it remained lower overall against the New Zealand Dollar.

GBP/NZD Exchange Rate Forecast: Middle East Volatility to Continue?

Looking ahead, developments in the Middle East are expected to remain the primary driver of GBP/NZD.

Shifts between risk-on and risk-off sentiment could result in continued volatility for the pairing.

On the data front, markets will monitor commentary from Bank of England officials, including any signals on the policy outlook.

Attention will also turn to the UK’s latest GDP figures.

Forecasts point to subdued growth, which may weigh on Sterling if confirmed.