Positive data on both sides saw a volatile beginning to the last seven days of trading, although the long Easter weekend later flattened movement. The Pound Sterling to New Zealand Dollar conversion rate has trended between 2.0994 and 2.1209 during the past seven days.
Positive New Zealand Trade Balance Figures Interrupt Pound Appreciation
Pound Sterling gains were reversed on Wednesday after the release of positive trade balance figures for New Zealand. The data showed a significantly larger-than-expected monthly trade surplus of $339 million, thanks to an increase in imports of $0.2 billion compared to a $0.35 billion rise in exports. Year-on-year (YoY) the trade deficit for February closed by -$0.26 billion to -$3.32 billion.
Thursday saw GBP/NZD advance again thanks to a combination of positive UK retail sales and better-than-expected US ecostats. UK retail sales excluding fuel grew by 4.1% in February, a slowdown of -1% on the previous month’s year-on-year (YoY) consumer spending figure but better than the 3.1% result forecast. The Pound was also helped by good labour market data from the US, which weakened the New Zealand Dollar as safe-haven USD demand increased.
Easter Weekend Slows Trading as Domestic Data Dries Up
With the Easter holiday closing markets across the globe, there was no data from either the UK or New Zealand to drive the currency pair over the weekend. Several key US data releases on Good Friday and Easter Monday provided a little volatility to an otherwise flat trading period. Highlights included an unexpected 0.4% uptick in Q4 annualised Gross Domestic Product to 1.4%. Over the four-day weekend the Pound was able to make a marginal advance on the ‘Kiwi’.
GBP/NZD Remains Within Opening Levels; Financial Sector Confidence Falls
There is no UK data set for release today, although news of falling confidence among the financial sector has added weight to previous warnings that the UK economy is set to slow in the coming months. Profitability for financial service firms increased at its slowest pace for two years, with the survey of 104 companies pointing to instability in the financial markets, internal competition and economic uncertainty as the largest challenges over the next two years.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently holding opening levels, with the Pound prevented from sinking too far into negative territory thanks to news that the Bank of England (BoE) plans to take action to prevent a buy-to-let housing market crash. Chancellor George Osborne has already announced new tax measures to help slow the pace of investors securing loans in order to buy properties to rent, although currently this has sparked a frenzy of buying activity as potential landlords act fast to buy property before the new measures come into force.
UK Data Predicted to Dominate GBP/NZD towards the Weekend
Figures for New Zealand remain relatively thin on the ground over the coming days, with the only releases being the Building Permits for February due during tomorrow’s Australasian session and Thursday’s ANZ Business Confidence index and M3 Money Supply year-on-year (YoY).
Although the only UK release over the next couple of days is the Gfk Consumer Confidence index, Thursday holds the potential for significant Pound Sterling movement thanks to GDP and business investment figures, as well as a speech from BoE Governor Mark Carney.
Heads Up
Summary of major upcoming data releases that we think may move the market.