The Pound has been in a relatively strong position against the New Zealand Dollar and other peers recently, despite continued referendum concerns.
The New Zealand Dollar has been laid low by a continuing disappointment in the price of milk; a nationally important commodity.
Pound Sterling Appreciates against Peers despite Dire Situation
The Pound has been stable against its competitors lately, potentially owing to reduced concerns over future ‘Brexit’ limitations.
The UK currency has not been universally positive against its peers, however, as a number of negative factors have still weighed on Sterling to some extent.
These factors include the recent manufacturing PMI for April, which fell from a growth figure of 50.7 into the contraction range at 49.2. The EEF – an organisation for UK and EU manufacturers – partly blamed the UK Referendum for this shortfall, stating that ‘the sharp drop to a three year-low and another month of reported job cuts could be the clearest sign yet that referendum uncertainty is starting to weigh on the real economy.’
Adding to this perceived dovishness has been a report from the Institute of Chartered Accounted in England and Wales (ICAEW), which has released polling figures identifying ‘Brexit’ as one of a number of factors having a detrimental impact on the appeal of the UK currency.
New Zealand Dollar Slumps on Australian Interest Rate Cut and Poor Milk Prices
The ‘Kiwi’ has been universally weak against its economic competitors recently, owing to the latest downtrend in the price of class 3 milk per hundredweight.
Although previous dairy auction results have actually seen price rises, this has done little to help out the still-pressured dairy industry that is of such high economic importance to New Zealand.
In addition to having to put up with poor milk prices, the ‘Kiwi’ has also been let down by the declining fortunes of its neighbouring currency, the Australian Dollar (AUD). This has been limited in its appeal due to the Reserve Bank of Australia (RBA) cutting the interest rate for the first time in a year.
This Week’s GBP/NZD Exchange Rate Forecast
For the current week, Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate movement may occur as a result of tonight’s New Zealand employment results for the first quarter, tomorrow’s UK construction PMI outcome and Thursday’s UK services and composite PMI stats. Outside of direct economic data, the UK local election results may influence the Pound’s appeal on Friday.
In summary, forecasts are for a rise in the NZ unemployment rate from 5.3% to 5.5%, a slight drop for UK construction and a decline in both services and composite outcomes.
The local election results are unknowable at present, although if current London Mayor and ‘Brexit’ supporter Boris Johnson loses his seat, the Pound may rise on reduced odds of an ‘Out’ vote.
Heads Up
Summary of major upcoming data releases that we think may move the market.