The pound sterling and the New Zealand dollar traded with heightened volatility last week, as shifting risk sentiment and the UK’s latest GDP figures drove choppy movement in GBP/NZD.
Pound to New Zealand Dollar (GBP/NZD): 2.3265 (0.00%)
Pound to Dollar (GBP/USD): 1.3400 (-0.20%)
New Zealand Dollar to US Dollar (NZD/USD): 0.5760 (+0.15%)
DAILY RECAP:
The Pound (GBP) lacked clear direction through the first half of last week amid a lull in UK economic data and mixed messaging from the Bank of England.
Comments from BoE policymaker Alan Taylor unsettled Sterling after he reiterated his preference for further interest rate cuts, while also suggesting the bank may reach its neutral rate sooner than previously expected.
Sterling then slipped on Thursday, despite the UK’s latest GDP figures beating forecasts. The Office for National Statistics reported month-on-month growth of 0.3% in November, above expectations for 0.1%, but markets judged the data to be flattered by one-off factors and insufficient to alter the broader picture of a sluggish UK economy.
Losses in GBP/NZD were later pared, with the pairing recovering toward the end of the week.
Meanwhile, the New Zealand Dollar (NZD) saw uneven trade as risk appetite fluctuated. The ‘Kiwi’ initially struggled as geopolitical uncertainty weighed on risk-sensitive currencies.
Late in the week, NZD found support from a surprisingly strong domestic manufacturing PMI, which jumped from 51.4 to 56.1 in December, its highest reading in four years. However, the currency was unable to sustain these gains as market sentiment remained fragile.
Near-Term GBP/NZD Forecast: UK and NZ Data in Focus
Looking ahead, a heavy run of UK economic data could inject fresh volatility into GBP/NZD.
Tuesday’s labour market report will be closely watched for signs of cooling wage growth or softer employment conditions, which could reinforce expectations for Bank of England rate cuts. Attention then turns to Wednesday’s inflation data, where a cooler-than-expected CPI print could weigh further on Sterling.
The week concludes with UK retail sales and preliminary services PMI figures on Friday. Weak consumer spending and subdued activity could leave the Pound on the back foot.
For the New Zealand Dollar, the focus will be Thursday’s fourth-quarter inflation report. A modest uptick in inflation could prompt a slight hawkish repricing of Reserve Bank of New Zealand expectations and lend the ‘Kiwi’ some support, although broader risk sentiment is likely to remain a key driver.
