Foreign Currency Market Update – GBP / NZD Update
The past week has seen the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate advance steadily, coming up from a low of 2.2972 at the start of the week to 2.3339 by the end.
The Pound was given a mixed bag of results when it came to domestic data last week, with Wednesday’s Earnings, Claims and Unemployment Figures being the highlight. The biggest influencer was the Unemployment Rate outcome for the three months to the end of September, which fell from 5.4% to 5.3% despite expectations for stagnation. This gave the Pound a particularly large boost due to the fact that the 5.3% figure indicated the lowest level of unemployment in the country since April 2008.
The New Zealand Dollar was meanwhile worsened in its performance by the continually declining price of milk, which has fallen from $15.50 on November 9th to come in under $15.40 today.
The weekend saw a mix of data for New Zealand, which included the negative October Performance of Services Index which fell from 59 to 56.2 while Q3 Retail Sales Excluding Inflation rose from 0% to 1.6% on the quarter.
UK data for this week has been decidedly varied so far, with Monday’s annual rise in the Rightmove House Prices figure for November triggering a downtrend over concerns voiced last week by the Royal Institute of Chartered Surveyors (RICS) that a UK housing bubble is developing. The week’s other UK ecostat, however, has had little overall effect. This has primarily been because the fluctuations in UK inflation for October have effectively cancelled each other out. The monthly base figure rose from -0.1% to 0.1%, while the base yearly figure remained at -0.1%; both outcomes were in line with predictions. The core annual printing, however, was unexpectedly positive, rising from 1% to 1.1%.
The only other data of note this week has been the recent Reserve Bank of New Zealand Q4 2-Year Inflation Expectation, which has been pessimistically downgraded from 1.94% to 1.85%.
For the rest of this week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of the UK Retail Sales results for October and November CBI Trends, out on Thursday, along with Friday’s New Zealand Credit Card Spending and the UK government borrowing data.
With Thursday’s UK figures, forecasts have been negative across the board with predictions for all fields having either a negative or slowdown result. To a lesser extent, this applies to the
other UK data due on Thursday, the CBI Trends for Total Orders and Selling Prices, which are both expected to improve slightly while remaining in negative numbers.
On Friday, the day’s UK borrowing results are partially lacking in predictions and have mild reductions in the amount borrowed by the government in October. For New Zealand, no forecasts have been made for the Credit Card Spending figures covering the monthly and annual October results.
Heads Up
Summary of major upcoming data releases that we think may move the market.