Update: Forecasts for Accelerating UK Economic Growth Fail to Push GBP/NZD Exchange Rate Higher
The Pound (GBP) to New Zealand Dollar (NZD) exchange rate has improved marginally today, but at around NZ$1.91 the rate remains below May’s high of NZ$1.96.
There has been a scarcity of solid UK economic data so far today, so Sterling has instead been affected by economic forecasts.
Although theoretical at this point, research suggests that the UK economy could greatly benefit from drones and high-speed rail lines in the future.
In the former case, Elaine Whyte of PricewaterhouseCoopers said:
“I envisage that the advantages of drone technology will be well established within the decade – not only for business purposes but also for helping to protect our society.”
BoE and Treasury Disagreement Causes GBP/NZD Exchange Rate Turbulence
The Pound to New Zealand Dollar (GBP/NZD) exchange rate has declined slightly today on growing concerns about post-Brexit agreements.
The specific issue in this case is whether financial services providers in the City of London will be able to freely operate within the EU after Brexit.
EU Chief Negotiator Michel Barnier rejected a City-specific deal earlier this month, and more recently the Treasury and Bank of England (BoE) have clashed over the issue.
The Treasury reportedly favours a deal with the EU that would keep the City closely tied to the trading bloc, but BoE officials don’t want a loss of authority or to be made ‘rule-takers’.
The situation risks a high-profile argument between the Treasury and BoE breaking out and fears of this have contributed to the Pound’s devaluation today.
New Zealand Dollar to Pound Exchange Rate (NZD/GBP) Rises despite Cattle Disease Outbreak
Today’s New Zealand Dollar to Pound (NZD/GBP) exchange rate rise has partly been caused by the recent bout of GBP weakness as the latest NZ news has been mixed.
Most prominent has been the news that the NZ government is planning to cull hundreds of thousands of cattle to combat an outbreak of the disease Mycoplasma Bovis.
The disease, which can reduce milk production, has reportedly spread across the country and poses a risk to the nationally-important dairy industry.
On the one hand, fewer cows producing milk can mean that NZ dairy exporters will be able to benefit from higher dairy prices due to reduced supply.
On the other, such a large number of animals culled will negatively impact the livelihoods of NZ dairy farmers and could reduce competitiveness with other nations.
New Zealand Dollar (NZD) traders are further on edge after last week’s assessment by Westpac Bank that national economic growth will slow in the future.
GBP/NZD Exchange Rate Volatility Forecast on UK Confidence and PMI Stats
This week, Pound/New Zealand Dollar exchange rate movement may be caused by UK consumer confidence readings on Thursday, along with manufacturing activity figures on Friday.
The first of these, GfK’s consumer confidence reading for May, has the potential to support the Pound (GBP) as it is predicted to show an improvement on the previous negative reading.
Less positively, Friday’s manufacturing PMI for May is forecast to show slowing activity, meaning it could trigger late-week GBP/NZD exchange rate losses.
The main influence on the New Zealand Dollar (NZD) this week may be Wednesday’s speech from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr.
Earlier in May, Mr Orr panicked NZD traders by suggesting that the next interest rate adjustment could be a cut instead of a hike.
Mr Orr also stressed that interest rates would only rise in the future on the basis of higher inflation.
If he reiterates such sentiments on Tuesday then the New Zealand Dollar could drop, not least because inflation rates have progressively fallen since late 2017.
Further ahead, the New Zealand Dollar may recover against the Pound on Thursday and Friday if respective business and consumer confidence readings show improvements.