GBP/NZD Outlook: Likely to decrease as the rate is below its recent average and near recent lows, influenced by significant economic warning signs for the UK.
Key drivers:
• Rate gap: The Bank of England is expected to lower rates to stimulate a slowing economy, putting pressure on the pound.
• Risk/commodities: The New Zealand dollar is benefiting from an improving risk appetite amid a positive market mood, despite ongoing trade challenges.
• One macro factor: Upcoming US tariffs threaten to push the UK into a recession, adversely affecting GBP.
Range: The GBP/NZD is likely to drift lower within the recent 3-month range as economic concerns dominate.
What could change it:
• Upside risk: A surprising positive turn in UK economic data could lend support to GBP.
• Downside risk: Escalation of US tariffs could increase pressure on GBP, causing further declines.