The GBP/NZD rate could extend its recovery if UK inflation strengthens BoE rate expectations, while risk aversion continues to weigh on the Kiwi.
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose to a near one-month high last week, with a risk-off mood and disappointing NZ data weighing on the ‘Kiwi’.
At the time of writing, GBP/NZD traded at NZ$2.3010, up over 0.5% on the week.
DAILY RECAP:
The risk-sensitive New Zealand Dollar (NZD) came under pressure early last week as concerns about the conflict in the Middle East soured the market mood.
This persisted through much of the week, with US-Iran peace negotiations seeming to have stalled.
NZD then faced notable pressure during Thursday’s Asian trading session. New Zealand business inflation expectations unexpectedly eased in the third quarter, dampening bets on a Reserve Bank of New Zealand (RBNZ) interest rate hike and sending the ‘Kiwi’ spiralling to multi-week lows.
The New Zealand Dollar recouped some losses towards the end of the week, thanks to an improvement in market risk appetite. However, it remained lower overall.
The Pound (GBP) started the week on the front foot, with Sterling climbing without a clear catalyst for the movement.
A lack of data then muted GBP on Tuesday and Wednesday, with the Pound trading without a clear directional bias. However, it was able to rise against the weakening ‘Kiwi’.
The UK’s GDP figures on Thursday failed to lift Sterling. Although the British economy expanded at a decent pace through the first half of 2026, investors are concerned that this momentum won’t last through the remainder of the year.
Friday then saw the Pound move without a clear trajectory once again.
Near-Term GBP/NZD Forecast: UK Inflation to Lift the Pound?
Looking ahead, this week brings some high-impact UK economic data, starting with the latest jobs report on Tuesday. The employment data could underpin the Pound, if it shows that the labour market remained relatively resilient in the three months to June.
The UK’s consumer price index on Wednesday could then give GBP a lift. A forecast acceleration in inflation in July could boost the Pound by fuelling Bank of England (BoE) interest rate hike bets.
Finally, Friday sees the release of the UK’s July retail sales figures and preliminary PMIs for August. While a contraction in sales could dent GBP, steady services activity this month may offset the downside.
As for the New Zealand Dollar, a forecast rise in PPI in the second quarter could support NZD on Tuesday night, if it boosts inflation expectations.
Some other mid-tier data is due out later in the week, including New Zealand’s trade figures and credit card spending. However, risk appetite may be the dominant factor for NZD exchange rates, with a shifting mood potentially driving volatility in the ‘Kiwi’.
Our currency coverage draws on live market data, official economic releases and published bank research.
