NZD Weakness Done: Citi - Pound Sterling Live

What the desk is arguing

Citi's assertion that the NZD weakness is over reflects a belief that the currency has found a support level bolstered by economic resilience in New Zealand. Recent performance indicators, such as rising commodity prices and a stable outlook on interest rates, suggest a potential reversal in the NZD's fortunes.

Furthermore, Citi points to external factors that may drive renewed investor interest in the NZD. The potential for growth in the Asia-Pacific region, alongside improved trading conditions, supports the narrative that the downside for the NZD is limited.

Where it sits in our coverage

Currently, our consensus target for the NZD stands at 1.075, with a trading range projected between 1.04 and 1.12, reflecting a moderate bullish outlook. Citi's view appears to align with this consensus, indicating that the NZD may trend towards the upper end of this range as improving fundamentals support the outlook.

Among our analysts, the targets for the NZD from various institutions highlight different perspectives. Specifically, we have:

• JPMorgan: 1.10
• Barclays: 1.08
• Goldman Sachs: 1.09

How other firms see it

While Citi maintains a bullish stance, some firms hold a more cautious view. For instance, BofA suggests that persistent global headwinds could still pose challenges for the NZD, leading them to set a target of 1.04 for the same horizon. Their outlook contrasts with that of Citi, emphasizing the need for caution despite the potential for a rebound in the NZD's value.

Overall, market expectations remain divided, indicating a nuanced approach to trading the NZD amid fluctuating external conditions.