GBP/NZD News and Forecast: UK Shoppers Stumble but Pound New Zealand Dollar Exchange Rate Keeps Balance

Foreign Exchange Traders Nonplussed by UK Data, Leaving GBP/NZD Exchange Rates Unchanged

The Pound to New Zealand Dollar (GBP/NZD) exchange rate is having a slow start to the week, with poor data from both the UK and New Zealand limiting movement in the pairing.

Pound Sterling (GBP) exchange rates have remained weaker following last week’s UK retail sales data, which showed meagre growth of 0.1% in January – far lower than had been anticipated.

This lacklustre result was largely blamed on difficult conditions for UK retailers and sliding household spending power as wages continue to fail to keep pace with inflation.

As consumer spending supports two-thirds of UK economic output, any sign of weakness here is viewed as worrisome for GBP investors.

New Zealand Services Sector Slowdown Leaves NZD Exchange Rates Static

On the other side of the pairing, New Zealand Dollar (NZD) exchange rates have come under pressure following reports of slowing services sector activity in January.

The BusinessNZ Performance of Services Index (PSI), released on Sunday, showed a small dip from 56 points to 55.8, pointing to a reduced level of activity.

Commenting on what the stats could mean for New Zealand’s economy, Bank of New Zealand (BNZ) Senior Economist Craig Ebert said:

‘Given [the services PSI’s] recent volatility, it will bear watching for what it does next. Any signals of a slowing jobs market would be important, cognisant of how strong the labour market has been to date and the high amount of immigration that needs to be absorbed.

While the PSI is relatively robust, combined with the performance of manufacturing index it signals something of a slowing in GDP growth for the near term.’

GBP/NZD Forecast: Exchange Rate Volatility Predicted on UK Unemployment and GDP Figures

This week, Pound to New Zealand Dollar (GBP/NZD) exchange rate movement is likely to be reactive to UK unemployment and earnings data, due out on Wednesday.

The UK unemployment rate is currently tipped to remain unchanged at 4.3%, while the pace of wage growth is also expected to remain unchanged.

Particular focus will be on earnings, with any unexpected decline here liable to cause the GBP/NZD exchange rate to slide.

If average income growth fails to catch up with the rate of inflation, the UK wage squeeze will persist, weakening GBP exchange rates.

Sterling traders will also be closely watching Thursday’s GDP growth rate numbers for Q4. A downward revision here would likely drag the GBP/NZD exchange rate lower.

Pound NZ Dollar Forecast: Dairy Prices and New Zealand Consumer Spending Forecast to Trigger GBP/NZD Movement

In terms of New Zealand data, tomorrow’s Global Dairy Price auction could cause a decline in the Pound Sterling to New Zealand Dollar GBP/NZD exchange rate if prices remain resilient in New Zealand’s main export commodity.

Prices previously grew by an impressive 5.9% and a similar-sized rise would lend support to NZD.

Other noteworthy data releases this week include Thursday’s NZ retail sales figures for Q4 2017, which economists expect to show a 1.1% quarterly rise, translating to healthy 5.1% year-on-year increase. Such a result could leave the Pound Sterling to New Zealand Dollar exchange rate weaker.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon