GBP/NZD Outlook:
Bearish, as the rate is below its recent average and near recent lows, influenced by UK economic uncertainty.
Key drivers:
• Rate gap: The Bank of England's cautious stance on interest rates contrasts with expectations for cuts from the Reserve Bank of New Zealand, creating pressure on the pound.
• Risk/commodities: Although dairy prices support the New Zealand dollar, ongoing global trade tensions add volatility to its outlook.
• One macro factor: UK’s upcoming GDP figures may reveal slow growth, potentially leading to further GBP weakness.
Range:
Expect the GBP/NZD to test its recent lows while remaining within the stable 4.0% range observed over the past three months.
What could change it:
• Upside risk: A much stronger-than-expected UK GDP report could boost the pound significantly.
• Downside risk: Further signs of internal political instability in the UK could lead to sharp declines in the pound's value.