The Pound to New Zealand Dollar exchange rate advanced on Tuesday morning but remained below last week’s highs of 1.80. GBP/NZD has been strengthened by risk-averse attitudes, but the Pound’s gains were limited as the ‘Kiwi’ benefitted from strong Chinese growth data. GBP/NZD trended in the region of 1.79 at the time of writing.
Pound (GBP) Benefits from ‘Safe Haven’ Demand
Despite not being considered a ‘safe haven’ currency, the Pound has benefitted significantly from the market’s recent risk-off rush.
UK government bonds (which are priced in GBP) are perceived as a secure asset, making them appealing to investors during times of market volatility and uncertainty.
This has caused Sterling to strengthen in the last week despite long-term economic uncertainty in the UK.
Rising French Presidential election jitters as well as growing military tensions between the US and North Korea have made risky currencies like the New Zealand Dollar comparatively unappealing.
GBP/NZD was up over 0.5% on the day’s opening levels after UK Prime Minister Theresa May suddenly announced a UK general election for the 8th of June.
New Zealand Dollar (NZD) Benefits from Chinese Stats
Low appetite for risk-correlated currencies like the New Zealand Dollar has limited its strength in recent sessions, but the ‘Kiwi’ has been able to benefit from the latest economic data from China.
China’s Q1 Gross Domestic Product (GDP) results came in better-than-expected year-on-year, rising from 6.8% to 6.9% despite being predicted to remain at 6.8%.
While the quarterly growth rate came in at a relatively unimpressive 1.3%, the yearly result (on top of robust Chinese industrial production and retail sales data) supported the ‘Kiwi’ and limited GBP/NZD gains.
GBP/NZD Forecast: Key New Zealand Inflation Stats Ahead
Britain’s economic calendar is set to be relatively quiet this week, meaning the Pound is likely to continue being driven by its rivals and ‘safe haven’ demand.
New Zealand Dollar strength will rely heavily on risk-sentiment as well as the results of Thursday’s New Zealand Consumer Price Index (CPI).
New Zealand’s Q1 inflation data will be published during Thursday’s Asian session and is projected to improve from 0.4% to 0.8% quarter-on-quarter and from 1.3% to 2% year-on-year.
If these results meet or beat expectations, the New Zealand Dollar could firm at the end of this week.