GBPNZD has data ahead on Wednesday, including an RBNZ press conference and UK inflation data.
GBPNZD – Weekly Chart
GBPNZD has found resistance at the 2.159 level after another attempt at the summer 2023 highs. If economic data supports the NZD, the price may retreat toward support at 2.060.
New Zealand’s central bank will have a strict policy decision this week, with economists and investors unclear whether they will start cutting interest rates or wait for further signs of cooling inflation.
A Bloomberg survey said 12 21 economists expect the Reserve Bank of New Zealand (RBNZ) to keep the benchmark cash rate at 5.5% tomorrow. Nine economists said they would start an easing cycle. According to bond market data, traders now see a 70% chance of a rate cut.
“The risk of tight monetary policy overshooting has gotten real,” said Nick Tuffley at ASB Bank in Auckland.
“We think the time for the RBNZ to cut is now, but a lot depends on how much its forecasts have shifted”.
The New Zealand economy has shown signs of entering a third recession in two years, and inflation has slowed down more than the central bank expected. All eyes will be on the RBNZ press conference at 11 a.m. HKT. The bank said a few months ago that it would start cutting rates in a year but is now looking at moving more quickly.
“It is difficult to justify such a radical change in the RBNZ’s thinking based on the evolution of data in recent months,” said Sharon Zollner, chief NZ economist at ANZ Bank. Analysts there see the bank making its first cut to come in November.
“Waiting for more evidence of the state of play is justified and relatively low cost, given monetary conditions have already eased substantially”.
The RBNZ will be followed by essential data for the UK economy, where inflation is expected to increase from 2% to 2.3%. The Bank of England cut interest rates at their last meeting, and it may need to pause if inflation moves higher again.
