Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Tumbles Again despite Weak New Zealand Data

Pound to New Zealand Dollar Exchange Rate down Following Federal Reserve Signals

The New Zealand Dollar (NZD) has been highly volatile in recent weeks, fluctuating in a relatively wide range on US-China trade developments and Central Bank speculation, but the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is now trending lower again.

Last week saw the GBP/NZD interbank level briefly touch on a 2019 low of 1.87, but the pair generally trended closer to the level of 1.89.

GBP/NZD movement was generally steadier this week until yesterday evening, when the pair was hit lower by Federal Reserve news. GBP/NZD currently trends closer to the interbank level of 1.88.

The latest losses were due to broad weakness in Sterling (GBP), combined with Federal Reserve speculation. Demand for the New Zealand Dollar appeared to be little-impacted by New Zealand’s latest card spending data which was also published this morning.

Pound (GBP) Exchange Rate Optimism Low despite Rise in UK Growth Rate

The Pound (GBP) outlook remains too dominated by no-deal Brexit fears and rising concerns about the possibility of an interest rate cut from the Bank of England (BoE), as it was unable to significantly benefit from yesterday’s UK growth data.

Britain’s May Gross Domestic Product (GDP) growth rate report beat forecasts in both yearly and three-month prints.

This offered the British currency some limited support, but the day’s other UK data was ultimately disappointing and kept investors anxious about how Brexit uncertainty was negatively impacting Britain’s economic activity.

A contraction in Britain’s economy in Q2 is still perceived as possible. Some economists speculate that a recession is still possible too, though fears of one have lightened.

Ultimately, persisting no-deal Brexit jitters and economic uncertainties kept pressure on Sterling and made it easier for the New Zealand Dollar (NZD) to advance.

New Zealand Dollar (NZD) Exchange Rates Surge Following Federal Reserve’s Dovishness

Despite lasting concerns that the Reserve Bank of New Zealand (RBNZ) could cut New Zealand interest rates again over the next year, and mixed New Zealand data, the New Zealand Dollar (NZD) has seen a rebound in demand on global developments.

While global trade jitters continue to keep a lid on the New Zealand Dollar’s appeal, global Central Bank speculation has led to a jump in demand for the ‘Kiwi’.

The New Zealand Dollar is a currency often favoured for its high yields, and the difference in yields is greater when rival Central Banks have lower interest rates.

As a result, this week’s strong signals that the Federal Reserve will cut US interest rates this month, as well as bets of more rate cuts over the next year, led to a weaker US Dollar (USD) and a stronger New Zealand Dollar.

This news helped NZD to sustain some gains, despite this morning’s New Zealand retail card spending data showing a slowdown in activity.

Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Investors Await NZ Business PMI

Unless there are any surprising developments in politics or Central Bank speculations, the Pound to New Zealand Dollar (GBP/NZD) exchange rate is on track to see losses this week.

With most of this week’s key Central Bank news already passed, GBP/NZD investors are now awaiting tomorrow’s New Zealand data which could cause some late-week movement in the pair.

New Zealand’s June business PMI is expected to have improved from 50.2 to 53.1. If the data beats forecasts, New Zealand’s economic outlook may be supported slightly and the New Zealand Dollar could be more likely to sustain gains.

There will also be comments from Bank of England (BoE) officials over the next day or so. This, or surprising developments in UK politics, could influence Pound (GBP) movement.

Of course, with yesterday’s Federal Reserve news so influential, any further developments in Fed speculation or US-China trade tensions would also cause Pound to New Zealand Dollar (GBP/NZD) exchange rate movement.

Josh Jeffery

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