NZD/GBP Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average, yet lacks a clear driver for further momentum.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand may cut interest rates to stimulate growth, contrasting with the Bank of England's recent hold on rates.
• Risk/commodities: High dairy prices continue to support New Zealand's economy, but overall risk appetite remains cautious amid global market uncertainties.
• One macro factor: Ongoing political uncertainty in the UK may delay economic recovery and impact GBP strength.
Range:
The NZD/GBP rate is expected to hold steady within its recent 3-month range.
What could change it:
• Upside risk: A surprise strong labor market report from New Zealand could drive the NZD higher.
• Downside risk: A dovish tone from the BoE could lead to further weakness in the GBP, potentially affecting the NZD/GBP exchange rate dynamics.