The Pound New Zealand Dollar (GBP/NZD) exchange rate slumped to a four-month low last week, as some supporting UK data failed to protect the pairing from a risk-on market mood.
At the time of writing, GBP/NZD traded at NZ$2.2938, down 1.4% on the week but up from its low of around NZ$2.2765.
DAILY RECAP:
The Pound (GBP) struggled at the start of the week amid fears that new tariffs on the UK threatened by President Donald Trump could have shaved 0.7% off UK GDP and tipped the country into a recession.
Mixed jobs data failed to support Sterling on Tuesday, with the unemployment rate holding at a multi-year high despite the number of people in work rising.
Likewise, hotter-than-forecast inflation also failed to lift GBP. Headline inflation rose from 3.2% to 3.4% in December, but markets chalked this up to temporary and seasonal factors.
Again on Thursday Sterling faced pressure in spite of some supporting data. UK government borrowing was lower than expected in December, and the UK’s distributive trades index showed a smaller-than-expected decline.
On Friday the Pound snapped its losing streak thanks to forecast-beating retail and services data. Retail sales grew 0.4% in December, rather than contracting as forecast, while the services PMI outpaced expectations to hit its highest level in 21 months in January.
Meanwhile, the risk-sensitive New Zealand Dollar (NZD) strengthened early last week as stronger-than-expected Chinese GDP data cheered markets.
Positive New Zealand data then buoyed the ‘Kiwi’ on Tuesday night, with December’s PSI showing that the county’s services sector expanded for the first time since February 2024.
A continued risk-on mood and strength in the Australian Dollar (AUD) – the ‘Kiwi’ Dollar’s cousin – kept NZD supported.
Thursday night’s inflation figures then propelled NZD to briefly hit the week’s high point against the Pound, after inflation exceeded forecasts in the fourth quarter of 2025. A little profit-taking saw the ‘Kiwi’ slightly trim its nightly gains, although it remained well up on the week.
Near-Term GBP/NZD Forecast: Upbeat New Zealand Data to Lift the ‘Kiwi’?
Looking ahead, risk sentiment could drive GBP/NZD through the first half of the week amid a lack of economic data on both sides.
The first key release will be New Zealand’s trade figures on Wednesday night. If the country reported another trade deficit in December then NZD could face some modest pressure.
Overnight on Wednesday and Thursday we have New Zealand’s January business and consumer confidence indexes, respectively. With both forecast to show improvements, the ‘Kiwi’ could catch bids as we enter the second half of the week.
Friday may then bring the focus back to market risk appetite, with little currency-driving data from either the UK or New Zealand.
