GBP/NZD Outlook:
Bearish, as the rate is below its recent average and near recent lows due to a dovish Bank of England and mixed UK economic indicators.
Key drivers:
- Rate gap: The Bank of England's recent decision to hold rates reflects a more cautious approach than the Reserve Bank of New Zealand, which is hinting at possible rate cuts.
- Risk/commodities: The decline in risk appetite has weighed on the New Zealand dollar, particularly as concerns over labor market conditions have emerged.
- One macro factor: Political uncertainty surrounding UK leadership and the Bank of England's next moves add pressure to the pound.
Range:
GBP/NZD is likely to drift within its recent range, testing the lower end while lacking strong bullish drivers.
What could change it:
- Upside risk: A surprise increase in UK economic data could improve confidence in the pound.
- Downside risk: Continued deterioration in global risk sentiment may pressure the NZD further, adding to GBP/NZD weakness.