GBP Climbs to Multi-Month High Against NZD as Geopolitical Risks Hurt Kiwi

Key Moments

Latest Exchange Rates

Weekly Performance Overview

The Pound to New Zealand Dollar (GBP/NZD) exchange rate strengthened notably over the past week, reaching its highest point in more than two months as investors moved away from risk assets amid mounting Middle East tensions.

The Pound (GBP) started the week in recovery mode, regaining most of the ground lost late in the prior week as UK government bond yields retreated from their recent peaks. This easing in yields helped stabilize Sterling after earlier weakness.

On Tuesday, the UK currency encountered renewed pressure following the release of the latest PMI data. The figures indicated a clear deceleration in private-sector activity, with the ongoing conflict in the Middle East cited as a factor dragging on economic momentum. Even so, the broader risk-off tone in global markets allowed GBP/NZD to continue edging higher.

Midweek trading in GBP was relatively contained, despite the release of fresh UK inflation data. While February’s CPI report was viewed as less timely in the context of the sharp rise in energy prices this month, an unexpected uptick in core inflation supported the view that the Bank of England (BoE) could still raise interest rates up to three times this year. This prospect underpinned the Pound, although it did not trigger a major breakout in the currency.

Towards the end of the week, GBP/NZD gave back some of its earlier gains after new UK retail sales figures highlighted a decline in consumer spending compared with the previous month. The softer spending data tempered some of the optimism surrounding the Pound.

New Zealand Dollar Pressured by Geopolitics

In contrast, the New Zealand Dollar (NZD) had few domestic catalysts, leaving its performance largely tied to global risk dynamics. The currency, which is often sensitive to changes in risk appetite, moved mostly in response to developments surrounding the Middle East.

At the start of the week, NZD came under pressure after markets reacted to comments from US President Donald Trump over the weekend, in which he said he would “obliterate” Iranian power plants. This rhetoric weighed heavily on risk sentiment and, in turn, on the New Zealand Dollar.

NZD later recovered some lost ground when Trump softened his stance, delaying potential strikes and stating that Washington and Tehran were engaged in peace discussions. This partial reversal improved the mood temporarily and allowed the currency to retrace some of its earlier losses.

However, sentiment turned negative again as Iran rejected Trump’s assertions. Confidence that a credible peace agreement could be reached diminished as the week progressed, particularly as the US deployed additional troops to the Middle East and regional attacks persisted. Against this backdrop of intensifying concern, the New Zealand Dollar weakened further, sending NZD to its lowest level against GBP in over two months.

Near-Term GBP/NZD Outlook

Looking ahead, the immediate UK economic calendar is relatively light, which may leave Sterling short of clear domestic direction for much of the upcoming period. The main scheduled release is the final estimate of fourth-quarter GDP. This figure is not expected to have a significant impact on GBP unless it deviates meaningfully from the preliminary reading.

New Zealand’s domestic data flow is similarly limited, with only one release expected to draw notable market attention. The latest business confidence index is due overnight on Monday, and expectations for a deterioration in March could weigh on NZD if confirmed.

Beyond scheduled data, developments related to the conflict in the Middle East are likely to remain a central driver for GBP/NZD. Any indications that the US and Iran are engaging constructively and exploring potential avenues for peace could improve risk sentiment and lend support to the New Zealand Dollar.

On the other hand, diminishing prospects for a diplomatic breakthrough or an escalation in attacks in the region could trigger further risk aversion, hurting NZD and offering additional support to GBP/NZD.

Given the sensitivity of markets to headlines, commentary, and rumors tied to the Middle East, the GBP/NZD pair is likely to experience volatile and uneven trading as investors react to evolving news flow.