Pound Hits Decade High Against New Zealand Dollar on Risk-Off Sentiment
The Pound-New Zealand Dollar (GBP/NZD) exchange rate reached a ten-year high last week, driven by a risk-off mood and weak data for the New Zealand Dollar. At the time of writing, the rate stood at NZ$2.3584, marking a gain of over 0.8% for the week and hitting its highest level since November 2015.
The Pound benefited from supportive comments by Bank of England Deputy Governor Dave Ramsden, which bolstered expectations of an interest rate hike in November. Although UK economic data was scarce, the Pound regained momentum after a revised GDP report showed stronger-than-expected economic growth in the second quarter. However, a slight downward revision in the UK's final manufacturing PMI caused some volatility.
Meanwhile, the New Zealand Dollar faced pressure due to souring market sentiment and softer economic data. Business and consumer confidence indices both indicated declines, exacerbating losses for the 'Kiwi'. The extension of the US-China trade truce initially provided stability, but rising oil prices and global rate hike fears weighed heavily on risk appetite.
Looking ahead, market risk appetite is likely to remain a key factor for GBP/NZD movement. With limited economic data releases this week, any shifts in global risk sentiment could determine the pair's trajectory. An anticipated improvement in New Zealand business confidence might offer some support to the NZD, but a prolonged risk-off environment could keep the Pound elevated against the Kiwi.