Over the past seven days the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending within the range of 2.1784 to 2.2315.
Although last week saw the Pound struggle versus most of its major peers amid mounting concerns regarding the forthcoming EU referendum and the period of uncertainty likely to precede the decision, the GBP/NZD exchange rate held a comparatively strong position thanks to the economic slowdown in China. Although analysts have suggested that New Zealand will not be as adversely affected by China’s struggles as its South Pacific neighbour Australia, China remains New Zealand’s most significant export market.
The ‘Kiwi’ (NZD) also struggled last week following the first Global Dairy Auction of 2016 which saw dairy prices slashed. According to the most recent Dairy Products Report from the US Department of Agriculture, inventories of most dairy products are up 10-20% over the previous month. With global supply swelling amid dampened demand from the world’s second-largest economy, dairy futures remain bleak which is likely to have a detrimental impact on New Zealand’s economic progress.
On Monday Pound Sterling edged higher versus the New Zealand Dollar by around 0.2%. This is mostly due to China’s ongoing struggles after persistent intervention from the Chinese government has thus far failed to stabilise equity markets, with the Shanghai Composite Index dropping by over -5.3% at the close of Asian trade on Monday. Also weighing on demand for the ‘Kiwi’ was November’s monthly Building Permits report for New Zealand which grew by just 1.8%; well below the previous figure of 5.4%.
Conversely, the British asset rallied versus a number of major peers on Monday despite a complete absence of domestic data to provoke changes. The Pound’s uptrend was initiated by traders looking to take advantage of Sterling’s comparatively low trade weight, although corrective trading wasn’t the only factor stimulating Sterling appreciation. Additional gains can be related to a report from Lloyds Bank which showed business output in England and Wales in December saw a solid pace of expansion.
Looking ahead, there will be a number of ecostats over the coming week with the potential to provoke volatility for the Pound to New Zealand Dollar exchange rate. Influential domestic data pertaining to New Zealand is somewhat thin on the ground with all publications considered low impact in terms of the provocation of market movement. However; Food Prices, Card Spending, Retail Card Spending, Truckometer Heavy, House Prices and ANZ Commodity Price will all be of interest to those invested in the ‘Kiwi’. In addition, Chinese Trade Balance data is likely to impact New Zealand Dollar trade.
In terms of British data there will be a number of influential ecostats over the coming week as well as a speech from Bank of England Governor Mark Carney and the BoE interest rate decision. Whilst the BoE is not expected to move on monetary policy at this time, any hints regarding the timeline for adjusting borrowing costs is likely to prompt Sterling movement. Like for Like Sales, Industrial Production, Manufacturing Production and the NIESR Gross Domestic Product Estimate will all be of interest to those trading with the British Pound.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending within the range of 2.2119 to 2.2313 during Monday’s European session.
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