Foreign Currency Market Update – GBP / NZD Update
The past week saw the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate experience notable volatility, with a high of 2.3022 on Tuesday being contrasted with by a low of 2.2465 on Thursday.
Last week the Pound was put at a disadvantage when the UK annual CPI for September posted at -0.1%, an unexpected return to negative inflation which weighed on Bank of England (BoE) rate hike expectations. The nation’s Earnings and Unemployment figures were, however, beneficial to the Pound on Wednesday. Average earnings were shown to be growing while the ILO Unemployment Rate fell from 5.5% to 5.4%, a 7-year low.
New Zealand was not without its say in last week’s GBP/NZD rate movement, however; the Business NZ Performance of Manufacturing Index for September rose slightly from 55 points to 55.4 on Wednesday, but the greater boon came on Thursday when the NZ Q3 CPI didn’t fall by as much as predicted.
Today, the Pound has advanced against the New Zealand Dollar to trade in the region of 2.2737. The most recent influences on the pairing have been the New Zealand Performance of Services Index for September, released yesterday, UK Housing data and Chinese growth numbers. The day’s UK Rightmove House Prices for October saw a minor reduction compared to previous printings, but Sterling was bolstered against the New Zealand Dollar as China’s Q3 GDP figure eased from 7% to 6.9%. In addition to this, China’s Industrial Production figures for September also fell short, something that has lowered the appeal of the ‘Kiwi’ by extension.
This week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of the New Zealand Credit Card Spending figure for September, the UK September Borrowing results, the UK Retail Sales figures for September and the US Markit Manufacturing PMI for October.
New Zealand’s sole major contribution to market movement this week is due on Wednesday, although at the time of writing, no forecasts had been made for the outcome of the nation’s Card Spending numbers. As per usual, the value of commodities like milk should also be considered a contributing factor to the movement of the ‘Kiwi’ in the week to come.
UK Borrowing figures, due on Wednesday, are expected to show slight improvements on previous results, with lower levels of borrowing present in both the base figure and the variant excluding Banking Groups. Forecasts have been decidedly more positive for the UK Retail Sales results out on Thursday, with increases of over 4.6% predicted for both the base figure and that including Auto Fuel.
The last major announcement likely to affect the pairing is due on Friday with the release of the US Manufacturing PMI; this week is a particularly crucial one for investors in the US Dollar and if the forecast decline occurs for the PMI score, enthusiasm for an interest rate hike next week may be dampened sufficiently to allow a ‘Kiwi’ rise against the Pound.
Heads Up
Summary of major upcoming data releases that we think may move the market.