Pound To New Zealand Dollar Price Forecast: RBNZ Shock Keeps Kiwi Under Pressure

The Pound-New Zealand Dollar could remain elevated if RBNZ repricing keeps the Kiwi under pressure, while a cautious market mood may further support GBP/NZD.

The Pound to New Zealand Dollar (GBP/NZD) exchange rate soared on Wednesday, in the wake of the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision.

At the time of writing, GBP/NZD was trading at around NZ$2.3671. Up around 1% from the start of Tuesday’s session.

DAILY RECAP:

The New Zealand dollar (NZD) collapsed on Wednesday, striking fresh multi-year lows against the majority of its peers after the Reserve Bank of New Zealand wrong-footed markets by unexpectedly leaving interest rates unchanged.

With most NZD investors having positioned themselves for an expected 25bps rate hike, the RBNZ’s shock decision triggered a dramatic repricing of monetary policy expectations that prompted a 1% collapse of the ‘Kiwi’ almost across the board.

In explaining its decision, the RBNZ pointed to signs that inflationary pressures may be less severe than previously feared, with data published last week showing that annual inflation eased to 3.7% in the third quarter, down from 4.1% in the previous quarter.

However, the ‘Kiwi’ was able to rebound from its worst levels after subsequent comments from Governor Anna Breman signalled this was likely just a pause and not the end of the bank’s current hiking cycle.

While able to soar higher against the New Zealand Dollar, the Pound (GBP) was subdued against most other major currencies on Wednesday, as Chancellor John Healey delivered his inaugural Autumn Budget.

Healey announced a range of measures aimed at providing households and businesses with more breathing space, as well as supporting Andy Burnham’s devolution agenda.

The Chancellor’s tax and spending plans ultimately proved fairly modest in scope, limiting the impact on Sterling, which instead appeared to take more direction from the UK’s latest growth forecasts and a downward revision to 2027 expectations.

Near-Term GBP/NZD Forecast: Cautious Mood to Benefit Sterling?

Turning to the second half of the week, the economic calendar becomes pretty light for both UK and NZ economic data.

As a result, we are likely to see the fallout from the budget and RBNZ rate decision continue to influence the Pound New Zealand Dollar (GBP/NZD) exchange rate.

The pairing may also take its cues from broader market trends, with a cautious market mood potentially leading investors to favour Sterling over the more risk-sensitive ‘Kiwi’.

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