The pound sterling and the New Zealand dollar saw volatile trade on Tuesday, with GBP/NZD rebounding from a one-month low as investors digested mixed UK labour market data alongside upbeat New Zealand surveys.
Pound to New Zealand Dollar (GBP/NZD): 2.3052 (-0.49%)
Euro to New Zealand Dollar (EUR/NZD): 2.01137 (+0.1%)
New Zealand Dollar to Dollar (NZD/USD): 0.58366 (+0.76%)
DAILY RECAP:
The New Zealand Dollar (NZD) surged overnight after a run of stronger-than-expected domestic data helped ease concerns about the country’s economic outlook.
New Zealand’s services PSI jumped from 46.9 to 51.5, beating forecasts of 48, while the composite PMI climbed sharply from 48.8 to 53.7 — its strongest reading since September 2022. The figures pointed to a broad-based improvement in private-sector activity and triggered a rally in the ‘Kiwi’ through late Monday and early Tuesday trade.
The Pound (GBP), by contrast, initially slid to a one-month low against the strengthening NZD before staging a partial recovery following the UK’s latest jobs report.
The labour market data painted a mixed picture. Employment rose by 82,000 in the three months to November, beating expectations, but the unemployment rate held at a multi-year high of 5.1% instead of easing as forecast. Wage growth cooled modestly, although it remained above inflation.
The combination of resilient employment but elevated joblessness allowed Sterling to claw back some losses, though GBP/NZD remained below its overnight highs.
Near-Term GBP/NZD Forecast: UK Inflation the Next Test for Sterling?
Looking ahead, attention turns to the UK’s consumer price index midweek.
Headline inflation is expected to edge up from 3.2% to 3.3% in December, with core inflation seen holding at 3.2%. Another stubbornly high reading could temper expectations for an imminent interest rate cut and offer the Pound some support.
However, a downside surprise could renew selling pressure on Sterling.
For the New Zealand Dollar, the domestic data calendar is quiet, leaving NZD vulnerable to swings in global risk sentiment. Any deterioration in market mood linked to US tariff threats or broader geopolitical tensions could weigh on the risk-sensitive ‘Kiwi’.
