GBP/NZD Outlook:
GBP/NZD is likely to decrease as the rate is currently 2.1% below its recent average and near recent lows, pressured by rising UK political uncertainty. This situation may further weigh on the pound if Labour loses the Gorton and Denton by-election today.
Key drivers:
• Rate gap: The Bank of England may maintain higher rates compared to the Reserve Bank of New Zealand, which is signaling an earlier easing.
• Risk/commodities: Ongoing volatility in oil prices could affect confidence in global markets, indirectly influencing the NZD.
• One macro factor: New Zealand’s anticipated improvement in business confidence may bolster the kiwi against the backdrop of UK political tensions.
Range:
GBP/NZD is likely to drift within its recent 3-month range, potentially testing the lower extremes as uncertainty lingers.
What could change it:
• Upside risk: A surprising win for Labour in the by-election, stabilizing political sentiment in the UK.
• Downside risk: Continued political instability in the UK could further weaken the pound.
