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.
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.
Our currency coverage draws on live market data, official economic releases and published bank research.
