From next Monday, economic figures will be released in both of UK and New Zealand. Particularly, GBPNZD is expected more volatile on Tuesday as NZ inflation expectations will be revealed by RBNZ and a lot of figures will be released in UK, including Consumer Price Index.
Generally, if the inflation figure is lower than expected, need for monetary easing, such as rate cut or quantitative easing, is increased. It leads to the local currency being cheaper. On the other hand, if the inflation is higher enough than expected, monetary policy is expected eventually tighten, which means the currency value is going to relatively higher.
Those fundamental factors drive Forex market sharply more than the natural trend.
Watching at the energy and commodity market, Crude oil price has approached to near the lowest level in last Aug since the beginning of Nov, Copper price has reached at the lowest level for last 6 years. In the sense of dropped market in this month, the inflation figures will be lower and it could be lower than anticipated. There is time lag between the figures released, and the FX could jump from the eastern market opening to the earlier western market opened during next Tuesday.
Although the last inflation figure for NZ indicated slightly higher than anticipated, it is still unclear to see if the inflation is recovered.
ECONOTIMES >> New Zealand Consumer price inflation was slightly stronger than anticipated
see if the inflation is recovered.
Stuff.co.nz >> Ongoing low interest rates needed to meet inflation target
In UK, Bank of England is expected to keep their interest rate lower. It implies the economic recovery and inflation are not enough from their view.
BBC >> Bank of England dampens prospects of early UK rate rise
By the way, the trend and momentum for GBPNZD indicates it is sharply lower towards the middle of next week. It implies UK inflation could be more disappointed? Let's see:)
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