GBP/NZD Exchange Rate Weakens Amid Rebound in NZ Business Sentiment
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is trending lower this morning after the ‘Kiwi’ was lifted overnight by the latest domestic business confidence figures.
At the time of writing GBP/NZD has retreated around 0.3% from the day’s opening levels, leaving the pairing around half a cent down from yesterday’s highs.
New Zealand Dollar (NZD) Exchange Rates Strengthens as Business Pessimism Falls
The New Zealand Dollar (NZD) punched higher against the Pound (GBP) in overnight trade on Tuesday as New Zealand’s business confidence showed signs of recovery this month.
The ANZ business outlook survey revealed 38% of the 390 firms surveyed in September expect business conditions to worsen over the coming twelve months.
While this still indicates a fairly gloomy outlook, September’s figures showed a sharp rebound from August when over 50% of firms struck a pessimistic tone, driving business confidence to its lowest levels since the financial crash a decade ago.
Sharon Zollner, ANZ Bank New Zealand’s chief economist said:
‘It is encouraging that nearly all activity indicators out of the ANZ Business Outlook survey rebounded this month, with only investment intentions deteriorating further.
‘If the indicators continue to rebound, it will increase the odds that while the economy may have hit a pothole, the wheels are not falling off.’
The rebound in confidence also helped the New Zealand Dollar avoid any losses from the release of some sub-par trade figures which saw the domestic trade deficit rocket up from NZ$-196mn to NZ$-1.4bn in August following a sharp drop off in exports.
Robust UK Retail Activity Fails to Inspire Pound Sterling (GBP) Exchange Rates
Meanwhile the Pound (GBP) is struggling to find any traction this morning despite the Confederation of British Industry (CBI) reporting stronger-than-expected distributive sales growth this month.
According to the CBI’s latest survey of retailers, activity in the retail sector remains remarkably robust in September, despite concerns the end of summer could see sales begin to slow.
While the headline figures were broadly positive, analysts suggest they may be some headwinds to come, potentially limiting the Pound’s gains this morning.
Anna Leach, Head of Economic Intelligence at CBI, said:
‘As we head into Autumn, retailers have seen the run of decent sales figures continue. But underlying conditions are clearly tougher, with the sector facing significant challenges – from squeezed household incomes, changing consumer habits to digital disruption.’
GBP/NZD Exchange Rate Forecast: Will the RBNZ’s Rate Decision Bolster the ‘Kiwi’?
Looking ahead to later this evening, movement in the Pound New Zealand Dollar (GBP/NZD) exchange rate is likely to be dominated by the Reserve Bank of New Zealand’s (RBNZ) latest rate decision.
With no policy changes expected from the bank today the focus will instead be on whether policymakers are still leaving the door open to a possible rate hike in the future.
In previous meetings this year the RBNZ has signalled the next move could be either up or down, however following on from New Zealand’s bumper growth in the second quarter, investors are hoping the bank’s outlook will have brightened, something which could help to extend the ‘Kiwi’s gains.
Meanwhile the focus for GBP investors tomorrow will be on a speech by Bank of England (BoE) Governor Mark Carney as they look for any clues on how the recent upswing in inflation and setback in Brexit negotiations may have altered the bank’s rate outlook.