GBP/NZD Forecast: Pound New Zealand Dollar Exchange Rate Stumbles In Upbeat Trade

The Pound to New Zealand Dollar (GBPNZD) exchange rate traded in a wide selection this week, with the pairing closing the session at around NZ$1.9477.

Pound (GBP) Weakens in Spite on BoE Rate Hike Speculation

The Pound (GBP) found itself on the backfoot from the New Zealand Dollar (NZD) throughout the majority of this week's session, after initially collapsing in the facial skin of the UK's energy price crisis. The crisis has exacerbated concerns over the resilience of the UK's economic recovery, as businesses will also be being pressured by staff shortages and supply chain constraints.

Michael Hewson, Chief Market Analyst at CMC Markets, said: ‘It is quite clear there's an increasing sense of unease concerning the economic outlook as an increasing quantity of companies look ahead to the prospect of rising costs, and the possible effects on their profit margins, at a time when central banks are coming under some pressure to pull back on the generosity of their current stimulus measures.'

The GBP/NZD exchange rate then rebounded from the two-week low on Thursday while the Bank of England (BoE) concluded its September policy meeting. This saw the BoE keep interest rates on hold this month, but signal that some moderate monetary tightening may be necessary as time goes on to keep a lid on inflation, that the BoE forecasts could rise above 4% in the near-term. The BoE's comments were interpreted as an indicator so it could begin raising interest rates in the coming months, with Sterling rallying as GBP investors started initially to price in a March 2022 rate hike.

New Zealand Dollar (NZD) Fluctuates amidst Mixed Market Risk Appetite

Whilst it could strengthen against a weakened Pound (GBP), the New Zealand Dollar (NZD) got off to an undesirable start against the majority of its other peers this week, amidst a sharp slump in market risk appetite. This came as market were rocked by fears over the potential collapse of China's second largest property development Evergrande, amidst concerns it could show to be China's ‘Lehman moment '. The ‘Kiwi'then faced additional pressure on Tuesday in the wake of comments from the Reserve Bank of New Zealand (RBNZ) Assistant Governor Christian Hawkesby, by which he did actually play down the likelihood of a pursuit rate of 50 basis points when the lender meets next month.

ANZ Bank Chief Economist Sharon Zollner, commented: ‘The RBNZ stressed today that in times of uncertainty, a measured policy approach is appropriate. ‘We never thought a 50bp move was a likely start to the hiking cycle; this confirms it. Our OCR forecast is unchanged, with 25bp hikes in the future in October and November, with steady hikes thereafter taking the OCR to 1.5% by August next year.' However NZD exchange rates then strengthened through the latter half the week as fade concerns over Evergrande helped to revive market risk appetite.

GBP/NZD Exchange Rate Forecast: UK Economic Concerns to Extend Pressure on Sterling?

Looking ahead, the Pound New Zealand Dollar (GBP/NZD) exchange rate may stick to the defensive through next week's session as a lull in high-impact UK data leaves the focus on the hurdles currently facing the UK economy. If the UK's energy price crisis worsen, then we will probably see Sterling face additional pressure through the week. For the time being, with NZD data also thin on the ground a few weeks, the New Zealand Dollar will probably remain exposed to promote risk appetite, potentially extending its gains if the marketplace mood remains broadly upbeat.