Pound to New Zealand Dollar Weekly Forecast: Risk Aversion Limits NZD Gains

GBP/NZD was broadly flat over the week but volatile, falling to a six-week low before recovering. Sterling weakened on UK political surprise and fiscal-discipline concerns after Prime Minister Andy Burnham appointed John Healey as Chancellor and discussed tax cuts. Mixed UK inflation data limited the impact: headline CPI cooled from 2.8% to 2.6% while core inflation stayed at 2.6%. Better-than-expected UK retail sales and services PMI later failed to provide lasting support. The New Zealand dollar initially firmed, then gained further after Q2 inflation rose from 3.1% to 4.1%, lifting expectations for more RBNZ hikes, but risk aversion tied to escalating Middle East tensions ultimately pressured NZD and helped GBP/NZD rebound. Looking ahead, the BoE rate decision and UK political developments are the key drivers for Sterling, while NZ business and consumer confidence data could shape Kiwi direction.