Pound-to-New Zealand Dollar Week Ahead Forecast: Pullback Risks Deepening

The New Zealand Dollar starts the new week with a show of intent.

The Pound to New Zealand Dollar exchange rate (GBP/NZD) drops half a per cent in the opening plays of the week, and we see growing scope for imminent consolidation ahead of a potential move to lower levels later in the week.

The fall takes the level of spot to 2.2794 at the time of writing, which was last recorded three weeks ago, and here we would look for support to potentially build.

A look at the daily chart shows a layer of graphical support at 2.2775, which is the August 19 low and the resistance top of the long-running range of 2024:

The test of this horizontal support line would coincide with a mean reversion higher to the nine-day exponential moving average (EMA).

Our Week Ahead Forecast model judges that the exchange rate should hug the nine-day EMA, and therefore is prone to mean reversion if it strays too far. As the chart shows, the market has diverged meaningfully and this implies a mean reversion is now needed.

Some consolidation of recent losses is likely; however, while below the nine-day EMA, the downside is preferred so an eventual break below the 2.2775 is a possibility for later in the week.

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i - Based on average GBP/NZD rate observed in July.

Heading into the recent recovery, the Kiwi is 2025's biggest underperformer, recording a deficit against all its G10 rivals, which speaks of a chronic underperformance.

We think it's too soon to call the end of that underperformance and this leaves us suspecting any GBP/NZD weakness is ultimately a consolidative move in the multi-year uptrend.

Note that the antipodean currencies can enter multi-week consolidative phases before trending in impressive fashion.

Nevertheless, the NZD gains must be respected for now, and they will offer GBP buyers some welcome relief.

The advance looks to be centred on the increased odds of interest rate cuts at the U.S. Federal Reserve following last week's below-consensus U.S. labour market reports (Wednesday's JOLTS data and Friday's non-farm payrolls).

With the market seeing ample easing, risk-on assets such as the Kiwi are seeing some gains. With this in mind, the main calendar event of the coming week will be inflation data from the U.S.

Watch Wednesday's Producer Price Index (PPI) as it offers an insight into whether or not tariffs are impacting prices faced by U.S. manufacturers. If the data exceeds the 0.3% m/m figure the market expects, there is a high chance global markets come under pressure.

This would weigh on NZD and help GBP/NZD recover.

But it's Thursday's headline CPI data from the U.S. that is the marquee event for markets this week. Here, the expectation is that the annual rate of inflation has climbed to 2.9%.

Again, anything above expectation would be a negative for assets such as the NZ Dollar, while an undershoot could potentially accelerate the currency's recent recovery.