The Pound to New Zealand Dollar (GBP NZD) exchange rate slipped back from a 17-month high last night as investors were left impressed by New Zealand’s latest employment statistics.
GBP NZD is currently at an interbank rate of around 1.9236, down almost two cents from yesterday’s high of 1.9420 following New Zealand’s jobs report.
New Zealand Dollar (NZD) Bolstered by Impressive Employment Figures
New Zealand Dollar (NZD) exchange rates rallied in overnight trade on Tuesday as markets shrugged off some of their concerns over the new Labour government in light of some impressive employment data.
According to data published by New Zealand’s statistics agency, employment growth leapt 1.1% in the third quarter, up from a revised decline of 0.1% in the previous quarter.
This jump bumped the jobless rate down from 4.8% to 4.6%, the best levels since 2008 and beating expectations of a more modest drop to 4.7%.
The better-than-expected fall in unemployment has also alleviated some fears over the new Labour government’s plans to alter the Reserve Bank of New Zealand’s (RBNZ) mandate to focus on reaching full employment.
Sterling (GBP) Resilient as UK Factory Sector Shows Robust Growth
The Pound has not taken last night’s losses lying down however as Sterling looks to mount a recovery in the wake of a healthy UK manufacturing PMI.
Data released by IHS Markit showed that British factory activity witnessed some robust growth in October, with its manufacturing index climbing from 56 to 56.3 and beating expectations that it would have slipped to 55.8.
The jump in activity appeared to be largely driven by an uptick in order growth, with the downturn in the Pound over the last year helping to make UK goods more appealing to foreign buyers.
Duncan Brock, of the Chartered Institute of Procurement & Supply, said; ‘It’s good to see the manufacturing sector holding strong and steady in October, buoyed up by an increase in new orders from the domestic market and improving on last month’s results.’
However, the fall in Sterling is also proving to be a major concern for many firms as the weaker exchange rate also causes input costs to rise, leading to narrowing profit margins.
GBP NZD Exchange Rate Forecast: Major BoE Rate Decision to Bolster Sterling?
Looking ahead to the second half of the week, movement in the GBP NZD exchange rate will (of course) be closely tied to the Bank of England’s rate decision on Thursday.
Sterling is forecast to jump tomorrow as the BoE’s Monetary Policy Committee (MPC) is widely expected to vote to hike interest rates for the first time in over a decade.
However, with some policymakers wary over placing too much pressure on UK consumers the bank may still vote to stay its hand this month, something that would likely cause the Pound to plummet as it much of its recent support has been drive by rate hike expectations.
Meanwhile, with little domestic data left to aid it this week, the New Zealand Dollar may begin to slide again over the next couple of days as the uncertainty of the new Labour government sets back in.