Pound To New Zealand Dollar Week Ahead Forecast: Jobs Data To Drive GBP/NZD Direction - Exchange Rates Org UK

What the desk is arguing

The desk posits that the direction of GBP/NZD will hinge on the upcoming jobs data from the UK, particularly in light of the recent trends in employment figures. Per the full note source, the market is bracing for a potential impact on the BoE's policy decisions, especially if wage growth continues to outpace expectations.

Recent data shows that the UK economy is grappling with inflationary pressures, with average earnings rising by 5.1% year-on-year. This could provide the BoE with justification to maintain or even tighten its monetary policy stance, which would support a stronger GBP against the NZD.

Where it sits in our coverage

Our consensus target for GBP/NZD is 1.075, with a range from 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)

This view aligns with jpmorgan, which is positioned at the upper end of the consensus range, while bofa presents a more bearish outlook, suggesting divergence in expectations regarding the jobs data's implications for monetary policy.

How other firms see it

Several firms, including jpmorgan and citi, share a bullish outlook on GBP/NZD, anticipating that positive jobs data will bolster the pound. Conversely, bofa holds a more cautious stance, predicting that any negative surprises in the jobs report could lead to a downward revision of GBP forecasts.

Traders should also keep an eye on the NZD/USD dynamics, as shifts in the Reserve Bank of New Zealand's policy could have spillover effects on GBP/NZD. Additionally, the trajectory of the AUD/NZD pair may provide further context for NZD strength or weakness.