NZD/GBP Outlook: Slightly positive, but likely to move sideways as the New Zealand dollar is above its recent average but lacks a strong driver to pull it further upwards.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is expected to maintain a hawkish stance, while the Bank of England may keep rates steady, supporting the NZD against the GBP.
• Risk/commodities: Global risk appetite has improved, with easing trade tensions benefiting the NZD but keeping the GBP in a narrow trading band.
• One macro factor: New Zealand's inflation rose above target levels, suggesting monetary tightening, which could be supportive for the NZD.
Range: The NZD/GBP is likely to hold within its recent trading range as both currencies navigate local economic conditions.
What could change it:
• Upside risk: A stronger-than-expected New Zealand inflation report could boost the NZD further.
• Downside risk: Renewed political uncertainty in the UK may undermine the GBP, but it could also lead to renewed pressure on the NZD.