The Pound to New Zealand Dollar (GBP/NZD) exchange rate has started this week on a firmer footing despite ongoing concerns that the UK could end up with a no-deal Brexit.
The interbank GBP/NZD exchange rate is currently trading in the region of NZ$1.94, up 4 cents from last week’s worst levels, as the pound takes advantage of reduced demand for higher-risk and commodity-correlated currencies.
New Zealand Dollar Fluctuates in Reaction to RBNZ Governor’s Forecast
With the currency crisis in Turkey bolstering the US Dollar and weighing on higher risk currencies, demand for the New Zealand Dollar (NZD) remains limited.
That being said, NZD has had some support from an optimistic outlook from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr.
Speaking to TVNZ1, Mr Orr optimistically forecast that:
‘The [economic] signs are very positive. You’ve got a lower exchange rate, meaning we’re earning more for our offshore efforts; the world growth is still very strong; the government is out spending and investing; households are still consuming, and business investment should be increasing.’
There are background concerns that New Zealand could be at risk of seeing a prolonged economic slowdown, so this statement from Mr Orr has gone some way to reassure NZD traders.
Another factor that has prevented notable NZD exchange rate losses today has been the weekend’s services PSI reading, which showed above-forecast sector growth in July.
GBP/NZD Forecast: Chance for Pound Sterling Gains on Faster UK Wage Growth
This week, Pound/New Zealand Dollar exchange rate movement may be caused by Tuesday’s UK jobs market data, along with Wednesday’s inflation rate stats.
Beyond this, GBP traders will also have Thursday’s UK retail sales stats to watch out for.
Current expectations are for the pace of UK wage growth to accelerate; such results could push the GBP/NZD exchange rate higher.
The GBP/NZD exchange rate could rise further on Wednesday if UK inflation climbs; current estimates are for a faster pace of price growth in July.
The one sour point for GBP traders could be Thursday’s UK retail sales figures, which risk devaluing the Pound if they reveal a slowdown for the year-on-year readings.
There are no NZ data releases due until 21st August, so risk appetite is likely to be the main cause of NZD movement.