The NZD to GBP market is currently bearish, reflecting recent trends in both currencies.
The downward movement is driven by a notable interest rate differential, as the Reserve Bank of New Zealand is expected to cut rates further, while the Bank of England is also projected to reduce rates but at a slower pace. Additionally, ongoing fiscal concerns in the UK raise doubts about economic stability, exerting further downward pressure on the GBP. Inflation trends in both regions suggest a calming effect, but the combined economic growth outlook remains subdued, affecting currency strength.
In the near term, the NZD/GBP exchange rate is projected to trade within a stable range, showing little volatility as it hovers close to recent lows.
Upside risks include a stronger-than-expected recovery in global risk sentiment, which could support the NZD. Conversely, any abrupt deterioration in UK economic conditions or a sudden hike in rate expectations could further weaken the NZD against the GBP.