GBP/NZD Outlook:
GBP/NZD is currently bearish, as the rate is below its recent average and testing recent lows. Concerns surrounding UK political uncertainty and the Bank of England's dovish stance contribute to the pressure on Sterling, while the Reserve Bank of New Zealand's easing timeline remains a primary driver supporting the New Zealand Dollar.
Key drivers:
• Rate gap: The Bank of England has signaled a potential shift towards interest rate cuts, while the Reserve Bank of New Zealand has maintained its rates but indicated a delay in future hikes.
• Risk/commodities: Ongoing volatility in global commodity prices could exacerbate the NZD's performance due to its heavy reliance on exports like dairy.
• One macro factor: A forecasted improvement in New Zealand business confidence is expected to lend some support to the NZD.
Range:
GBP/NZD is likely to drift within its recent range as it remains under pressure, testing the lower bounds.
What could change it:
• Upside risk: A surprising stabilization in UK political developments could boost GBP.
• Downside risk: A further decline in NZ export prices could deepen the pressure on the NZD.