GBP/NZD Outlook:
The GBP/NZD exchange rate is likely to decrease, as it is currently trading below its recent average and is near recent lows. The combination of soft UK economic indicators and rising caution around the New Zealand dollar is influencing this downtrend.
Key drivers:
• Rate gap: The Bank of England maintains steady interest rates amid softening economic data, while the Reserve Bank of New Zealand's hawkish stance keeps rates elevated to manage domestic inflation.
• Risk/commodities: The New Zealand dollar is under pressure due to cautious market sentiment, even though domestic manufacturing shows some strength.
• One macro factor: Mixed employment data from New Zealand reveals a slight rise in unemployment, suggesting a lukewarm labor market, which may weigh on the NZD.
Range:
GBP/NZD is likely to drift within its recent range, potentially testing the lower end as pressure continues.
What could change it:
• Upside risk: A significant improvement in UK job data could boost the GBP.
• Downside risk: Continued weakness in global market sentiment could further pressure the NZD.