The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has trended between lows of 2.1615 and highs of 2.2258 during the past seven days of trading.
In a rare performance on Tuesday, the New Zealand Dollar surged despite bad news from the latest GlobalDairyTrade auction. The GDT Price Index dropped -7.4% to US$2,276 per metric tonne, with whole milk powder seeing the largest decline, falling -10.4% to US$1,952 per metric tonne. However, gains in the GBP/NZD exchange rate were quickly lost after a stellar result from New Zealand’s Unemployment Rate for the last quarter of 2015.
NZD Rallies after Employment Figures Defy Expectations
Defying predictions of an increase to 6.1%, joblessness instead dropped to 5.3%, while Year-on-Year (YoY) Employment Change rose 1.3%, a much better result than the drop from 1.5% to 1.1% predicted. The result saw the ‘Kiwi’ enter a bullish charge which lasted for two days, taking the GBP/NZD exchange rate from a monthly best of 2.2258 down to a monthly low of 2.1615.
‘Kiwi’ gains were helped on Wednesday by a poor result from the US Non-Manufacturing Composite index, which repeated the performance of the week’s earlier ISM release to print far-below-expectations. With the safe-haven US Dollar sliding in value, investors turned to riskier assets like the ‘Kiwi’.
‘Super Thursday’ Sinks GBP Once Again on Universal Policymaker Dovishness
Pound Sterling lost ground on the 4th thanks to another ‘Super Thursday’ flop courtesy of the Bank of England (BoE). While it was almost universally accepted that there wouldn’t be a change in UK interest rates, the news that the Monetary Policy Committee (MPC) were unanimous in their decision surprised investors. For the previous six meetings policymaker Ian McCafferty had been a glimmer of hope, voting against the MPC in favour of a 0.25% rate increase. The fact he dropped his oppositional stance and re-joined the ranks of the doves suggested that the current worsening global conditions have more serious implications for the UK than first thought.
Stocks and Trade Weigh On GBP/NZD Exchange Rate Today
The New Zealand Dollar is fluctuating today after another stock market rout, which started during yesterday’s London session and spread across the European markets before hitting Asia, weakened risk appetite. The sell-off was triggered by news that China had dipped into its foreign reserves, expending US$99.5 billion in an attempt to keep the Yuan Renminbi (CNY) stable.
Despite the overall ‘Kiwi’ weakness, the GBP/NZD exchange rate remains in negative territory thanks to the release of UK Trade Balance figures. While December’s figures were mostly positive, with the visible trade deficit shrinking slightly more than forecast and the total trade deficit falling by -£1.5 billion, the overall figures paint a more concerning picture. According to the Office for National Statistics (ONS), the total trade deficit for the UK in the fourth quarter of 2015 widened from -£8.575 billion to -£10.352 billion. The deficit for the entire year also increased slightly, hitting a record high of -£125.028 billion.
Looking ahead, New Zealand is set to release credit card spending details and House Sales figures for January during the upcoming Australasian session. Tomorrow sees the publication of UK Industrial Production and Manufacturing Production statistics, as well as the NIESR Gross Domestic Product Estimate.
Heads Up
Summary of major upcoming data releases that we think may move the market.