GBPNZD – Daily Chart
GBPNZD has remained elevated above the 2024 high of 2.1905. There is some resistance ahead to further gains.
The GBP v NZD has a rate decision from the Reserve Bank of New Zealand at 9am HKT. That will lead into the UK consumer price data at 3pm HKT. New Zealand’s central bank is expected to deliver a third interest-rate cut in a row and signal further reductions this year to boost economic growth.
The RBNZ will lower the Official Cash Rate by 50 basis points to 3.75% on Wednesday, according to all 22 economists surveyed by Bloomberg. The bank’s projections are expected to show the OCR continuing to fall toward 3%, in smaller 25 basis point steps.
At the RBNZ’s final meeting of 2024, Governor Adrian Orr said policymakers expected to reduce the benchmark rate by 50 points in February. Economists said that conditions had been met to reduce rates, despite the re-election of Donald Trump and the threat of tariffs.
“Uncertainty breeds caution,” said Stephen Toplis at the Bank of New Zealand. “So developments in US policy making are a very good reason for the Reserve Bank not to cut rates any more than 25 basis points per meeting”.
Investors will look to the press conference from the RBNZ that could chart a path for the next policy decisions.
New Zealand suffered a deep recession last year, with gross domestic product falling -2.1% in the six months through September. That helped to cool inflation to 2.2%, which is near the middle of the central bank’s 1-3% target.
However, economists are expecting inflation to increase again this year as a weaker New Zealand currency boosts import prices. The RBNZ began cutting rates in August and plans to lower the OCR to a neutral level, which it estimates to be between 2.5% and 3.5%. After a 50-point cut on Wednesday, investors see a 25 basis point reduction in the OCR by the end of the year.
“We see the RBNZ projecting an end-2025 OCR of around 3.25% and an unchanged terminal rate of about 3%,” said Kelly Eckhold at Westpac in Auckland. “The RBNZ will likely note significant risks associated with global trade policies, although few conclusions will be drawn given the significant uncertainties”.
The consumer price index in the UK is expected to come in at -0.3% after a positive 0.3% in the previous month. That will take some heat from the pound but the NZD looks to be on a bearish path due to the central bank.
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