The past week has seen the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate end much as it began; the high point was a rate around 2.1923 while Thursday saw the week’s low of 2.1497.
‘Brexit’ Fears and Google Tax Farce Dominated GBP Movement Last Week
Last week was something of a rollercoaster in terms of Pound Sterling movement, although the currency ultimately ended up recouping earlier losses against the New Zealand Dollar.
Monday was fairly uneventful with no UK data of note released, while Tuesday brought a pleasant surprise in the form of the UK’s December Trade Balance stats. In all three fields, the deficit reduction was greater than expected, which resulted in Sterling appreciation.
Much less supportive were Wednesday’s UK industrial and manufacturing production stats, which showed worse-than-predicted results on both the month and the year.
On Thursday the focus fell on officials at Google and HMRC, with the recent shortfall in Google’s tax repayment amount. No real progress was made and the issues over UK politics brought up were only further compounded by the government opting to impose new terms on striking juniors doctors.
Closing the week were the UK’s construction output results for December, which improved on previous figures, and the announcement that an investigation was to be conducted into the flood of cheap steel onto the market, which had resulted in a number of high profile job losses and closures in the UK’s steel industry.
Across the week, investors also kept a close eye on PM David Cameron’s EU referendum negotiations, which generated mixed responses from EU leaders.
Indecision from Investors Today after UK Inflation Data
Today has been positive overall for Sterling; the UK currency started in a dominant state against its major peers and remained strong after the announcement of the morning’s inflation rate results for January.
While the annual non-core figure only increased from 0.2% to 0.3%, this was nonetheless the best result in a year for the UK. The result wasn’t enough to improve Bank of England (BoE) rate hike expectations however so the Pound did trim some of its earlier gains.
‘Kiwi’ Pressured
Last week saw fairly dramatic movement for the NZD/GBP exchange rate, with the pairing hitting a high of 0.4651 and then quickly falling to a low of 0.4559 less than a day later. The price of milk moved erratically upwards, while unremarkable outcomes from the January card spending and performance of manufacturing index failed to inspire any long term gains against Sterling.
The ‘Kiwi’ has crashed across the board today, largely due to the Reserve Bank of New Zealand (RBNZ) lowering its 2 year inflation expectation from 1.85% to 1.63%.
This Week’s GBP/NZD Exchange Rate Forecast
This week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of tomorrow’s UK Claims, Earnings and Unemployment results, as well as Friday’s Retail Sales and Borrowing stats.
Current predictions are for drops in both the number of claims and the number of unemployed persons, along with less-supportive reductions in the earnings figure for the January period.
For Friday’s UK ecostats, retail sales are forecast to rise while reductions have been forecast for the borrowing figures.
Heads Up
Summary of major upcoming data releases that we think may move the market.