New Zealand Dollar Shrugs off Declining Dairy Prices
Although the price of New Zealand’s key commodity declined today, disappointing UK inflation data meant that the GBP/NZD exchange rate still slipped on Tuesday.
UK Inflation Data Falls Short
The recent dip in the Pound to New Zealand Dollar exchange rate occurred as a reaction to the UK’s latest inflation report.
Annual UK inflation printed at 2.6% in July, the same as in June. While inflation remains far above the rate of wage growth (weighing on consumer spending) the current level of consumer price pressures isn’t considered strong enough to push the Bank of England (BoE) into hiking interest rates in the near future.
With today’s UK CPI report keeping Sterling under pressure, a dip in dairy prices didn’t prevent GBP/NZD slipping.
The latest Global Dairy Trade auction resulted in a price decline of -0.4%, following a previous -1.6% drop.
GBP NZD Forecast: Pound Turbulence possible on UK Wage Figures
With data for New Zealand until Thursday, the next causes of GBP/NZD movement are likely to be the UK’s employment and retail sales figures.
The main jobs news will be the rate of wage growth. A decline in average earnings will be Pound-negative, but an increase in wages would have the potential to send Sterling higher.
On Thursday ANZ‘s consumer confidence report for New Zealand will be released. If the index follows up the -1.9% decline recorded in July with another dip in August, NZD exchange rates could be pressured lower.