NZ Business PMI Falls to Six-Year Low, Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Flat

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Flat as Business NZ PMI Slumps to Six-Year Low

The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate was left muted this morning and the pairing is currently trading at an inter-bank rate of NZ$1.9342.

This follows the release of the New Zealand Business NZ PMI, which slumped to 50.2 from 52.7 and dampened sentiment in the ‘Kiwi’.

The reading was the lowest the index has recorded since December 2012.

Commenting on the data, BNZ Senior Economist, Doug Steel said:

‘The PMI sends a warning signal for the near term growth via its mix of falling production, near flat new orders, and rising inventory. Next week’s Q1 GDP should be reasonable, but beyond this downside risks are accumulating.’

Less-than-impressive NZ data could increase the odds of the Reserve Bank of New Zealand (RBNZ) cutting interest rates, so if local data continues to disappoint the Pound to New Zealand Dollar (GBP/NZD) exchange rate could benefit.

Risk-Sensitive New Zealand Dollar (NZD) Hit by Disappointing Chinese Data

Meanwhile, data from China didn’t help New Zealand Dollar (NZD) exchange rates on Friday.

China’s industrial output growth cooled to a 17-year low in May, another sign of weakening demand as the US increases trade pressure.

Industrial production edged up by a lower-than-forecast 5% in May compared to the 5.4% rate of growth seen in the previous month.

May’s figure was the weakest reading since early 2002.

Meanwhile, Chinese retail sales jumped by a higher-than-forecast 8.6% in May on an annualised basis, up from the previous month’s increase of 7.2%.

Pound Sterling (GBP) Exchange Rates Rise as Boris Johnson Edges Closer to Becoming Next PM

Pound Sterling (GBP) exchange rates received some support yesterday as Boris Johnson received 114 votes in the first ballot in the Conservative leadership contest to replace Theresa May, putting him significantly ahead of Jeremy Hunt, who came in second place with 43 votes.

As Johnson is a Brexiteer and has promised to take the UK out of the EU on 31 October, markets welcomed the sense of clarity, with the Pound (GBP) immediately moving higher on the news.

Furthermore, Cabinet Secretary Sir Mark Sedwill said the government was in ‘pretty good shape’ to cope with a no-deal Brexit.

The Cabinet Secretary also noted that there had been ‘a lot of preparation’ for the event of leaving the European Union without a deal on 31 October.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Outlook: Will a Dovish BoE Weigh on GBP?

Looking ahead to the start of next week, Pound Sterling (GBP) exchange rates could slide following the release of the UK Inflation Report Hearings.

If the Bank of England (BoE) is overly dovish about inflation hitting its target, it could dampen sentiment in Sterling.

Meanwhile, the New Zealand Dollar (NZD) could rise following Westpac’s Consumer Survey for the second quarter of 2019.

If the survey reveals that consumers are more upbeat, it could cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to fall.

Millie Empson

Contact Millie Empson