Pound to New Zealand Dollar Week Ahead Forecast: Rejected

  • GBP/NZD advanced blocked by resistance
  • But, studies remain constructive
  • Weakness likely to be limited, for now
    NZD outlook rests with U.S. data this week
  • GBP faces jobs report and GDP release

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The Pound to New Zealand Dollar exchange rate (GBP/NZD) was rejected at a key resistance level and we look for the subsequent pullback to extend into the next few days.

A strong resistance zone starts at 2.09, which has capped various rallies in GBP/NZD since September 2023. The current February-March rally rose into this area last week, peaking at 2.09144.

Above: GBP/NZD at daily intervals with the 200 DMA and 2.09 resistance area annotated. Track GBP and NZD with your own custom rate alerts. Set Up Here 

The question for the coming week is how far this pullback will extend. For now, we expect weakness to be relatively shallow.

This is because momentum indicators are largely consistent with the upside as GBP/NZD resides above its key 50-, 100- and 200-day moving averages (DMAs).

The general rule of thumb we use in our Week Ahead Forecast studies is that a break below the 200 DMA provides an official signal that a downtrend is brewing. Therefore, the multi-week picture favours the upside, even if the coming days see declines. We watch for pullbacks to find support in the region of the 200 DMA at 2.0702.

Last week we saw fresh New Zealand Dollar strength that was linked with the broader pullback in the USD, which was in turn linked to renewed confidence that the Federal Reserve will cut rates in June.

“The US dollar extended its decline against its major peers… with the commodity-linked currencies aussie, kiwi, and loonie gaining the most,” says Charalampos Pissouros, Senior Investment Analyst at

A run of softer-than-expected U.S. data prints boosted market bets that the Fed was on course to cut interest rates in June, supporting ‘risk on’ assets in the process.

The New Zealand Dollar’s gains confirm this currency remains highly responsive to the global picture, benefiting when expectations for U.S. rate cuts grow. Falling U.S. rates are supportive of the global economic outlook, to which the ‘commodity currencies’ like NZD respond.

Bets for a U.S. rate cut will increase if Tuesday’s U.S. CPI inflation release undershoots the 0.4% month-on-month and 3.1% year-on-year increase the market expects. The core CPI figure could be more important, with 0.3% m/m and 3.7% y/y anticipated.

Above: The descent of U.S. inflation has slowed lately. Image: UniCredit.

Given the rise in odds of a June rate cut at the Fed over recent days, the bigger surprise would come on an above-consensus print, as this would spoil the growing market narrative.

As such, expect the bigger market reaction to follow a stronger-than-expected print (Pound-New Zealand Dollar upside). Any undershoot would meanwhile boost the Aussie Dollar more than the Pound, prompting further GBP/NZD downside.

The British Pound is 2024’s best-performing G10 currency, and recent GBP/NZD gains can be explained by idiosyncratic factors.

The Pound will be tested on Tuesday when UK wage data is released; any undershoot would prompt a potentially notable pullback in Pound exchange rates.

Above: UK wage is expected to slow further. Image: UniCredit.

The market looks for a 5.7% increase for January (when bonuses are included) and a 6.2% increase when bonuses are excluded.

Keep an eye on Wednesday’s release of monthly GDP figures. For January, a figure of 0.2% month-on-month is expected.

Any above-consensus print in either the GDP or wage figures could help the Pound on its journey higher.

“The quality of the data will likely inform the MPC decision as its members debate the appropriateness of the current policy stance. With that in mind, evidence that the UK economy rebounded at the start of 2024 while the UK labour market remained tight could be seen as delaying any decision to lower rates from here and thus could help boost the rate appeal of the GBP,” says Valentin Marinov, head of FX research at Crédit Agricole.

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