GBP/NZD Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and near recent lows without a clear driver pushing it higher.
Key drivers:
• Rate gap: The Bank of England is expected to keep interest rates steady while the Reserve Bank of New Zealand may consider hikes, leaning towards a stronger NZD.
• Risk/commodities: The NZD is under pressure due to deteriorating market confidence, which affects its performance against the GBP.
• One macro factor: Recent growth in the UK manufacturing sector could support the GBP, but concerns about future rate cuts from the BoE dampen overall strength.
Range: GBP/NZD is likely to drift within its recent 3-month range as there is no strong catalyst on the horizon.
What could change it:
• Upside risk: Stronger-than-expected economic data from the UK could bolster the GBP.
• Downside risk: Continued deterioration in market confidence could further weaken the NZD, impacting the pair.