GBP/NZD Exchange Rate Improves after Strong UK Manufacturing Data
UPDATE: The Pound New Zealand Dollar exchange rate has continued to improve today, with GBP/NZD rising by 0.5%.
This greater advance for Pound Sterling comes despite no additional support from UK economic data – the morning’s UK PMI stats have continued to support GBP.
It is possible that the Pound will continue to rise in the days ahead, assuming that the UK’s construction and services PMIs also rise like today’s manufacturing reading.
GBP/NZD Exchange Rate Supported by UK Manufacturing Sector Growth
Pound Sterling (GBP) has risen against the New Zealand Dollar (NZD) today, hitting an interbank exchange rate of NZ$1.97.
This represents a recovery for the GBP/NZD pairing, as last week the Pound rose to a high of NZ$1.98. Today’s gains come from some surprisingly supportive UK PMI data.
Covering manufacturing sector activity in September, the latest PMI reading has risen from 53 points to 53.8, instead of falling to 52.5 as forecast.
This surprising increase in manufacturing activity has boosted Pound Sterling demand, not least because the week’s other UK PMI readings could also show growth.
New Zealand Dollar to Pound (NZD/GBP) Exchange Rate Dips on US Trade News
The New Zealand Dollar (NZD) has fallen against the Pound (GBP) and performed poorly against other currencies today due to low risk sentiment.
The main cause of this shift in trader interest has been the news that the US, Canada and Mexico have provisionally agreed on a new trade deal.
While this hasn’t triggered an immediate US Dollar rally, ‘riskier’ currencies like the New Zealand Dollar have still fallen in value.
A finalised agreement between the three North American nations could greatly boost USD trader confidence, which is why the New Zealand Dollar has pre-emptively fallen.
GBP/NZD Forecast: Risk of Pound Sterling Decline on UK Services Sector Slowdown
This week, Pound Sterling/New Zealand Dollar (GBP/NZD) exchange rate movement may be caused by further UK PMI readings, as well as New Zealand’s confidence data and an International Dairy Price update.
On the UK side, the week’s main economic announcements will include Tuesday’s construction PMI and Wednesday’s services PMI, both covering sector activity in September.
As with estimates for today’s manufacturing PMI, these other two UK PMI figures are also expected to show a slowdown in sector activity.
Such results could drain Pound trader confidence and cause clear GBP/NZD exchange rate losses; this is especially likely if the services sector reading declines.
Covering key areas such as retail sales and financial services, the services sector contributes more to the UK economy than manufacturing or construction.
Essentially, a forecast-matching or larger-than-expected services sector slowdown could significantly weaken Pound Sterling this week because of the negative implications.
NZD/GBP Outlook Focused on Business Confidence and Global Dairy Price Index
For New Zealand Dollar traders, then next economic data to watch out for will be this evening’s NZIER business confidence reading for Q3.
This reading is expected to show a worsening of already negative confidence levels, with a -25% drop in sentiment.
Lower consumer confidence risks causing an NZD/GBP exchange rate decline, as does a drop in dairy prices on Tuesday.
The Global Dairy Trade price index is expected to show a -1.5% drop in prices, which could further weaken an already-devalued New Zealand Dollar.
Lower dairy prices mean tougher conditions for NZ dairy farmers, so the New Zealand Dollar risks declining on a forecast-matching drop.