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GBP/NZD Plummets on Brexit Warning

Last week’s high: NZ$1.9447

Last week’s low: NZ$1.8973

Upbeat Employment Figures Also Bolster NZD

The Pound New Zealand Dollar exchange rate jumped higher at the start of last week’s session as the ‘Kiwi’ was bolstered by an uptick in both dairy prices and employment figures, with the domestic jobless rate tumbling to a decade low of 4.5% in the fourth quarter.

NZD sentiment suffered a little mid-week however as the Reserve Bank of New Zealand (RBNZ) signalled interest rates would likely remain on hold for some time.

Meanwhile the Pound was able to recoup some losses last week as the Bank of England (BoE) struck a decidedly more hawkish stance on raising interest rates.

However Sterling’s rally was cut short on Friday as the EU’s chief Brexit negotiator Michel Barnier warned that a transitional period for the UK is ‘not a given’.

GBP/NZD Outlook: Pound to Slide on Dip in Inflation?

Looking to the week ahead the GBP/NZD exchange rate may tumble if data shows that the UK’s inflation rate slipped as expected in January.

However the drop in inflation could prove to be positive for Sterling if markets believe it will relieve some of the pressure on household finances, which could lead to a rebound in consumer spending.

Meanwhile the ‘Kiwi’ may see some gains in the second half of the week with New Zealand’s latest business PMI expected to show that manufacturing activity rose in January.

Key Events

13th February

09:30 UK Inflation Jan

14th February

03:00 NZ Inflation Expectations Q1

15th February

21:30 NZ Manufacturing PMI Jan

16th February

09:30 UK Retail Sales Jan

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To keep up to date with the New Zealand Dollar, visit the NZD blog in our Currency News section.

 

Joe Mayhew
Senior Currency Broker
T: 01442 892 060

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