Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls by 0.8% after Positive Chinese Data

GBP/NZD Exchange Rate Falls as Chinese Data Smashes Forecasts

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell by 0.8% today, leaving the pairing fluctuating around NZ$1.863.

The New Zealand Dollar (NZD) rose against the Pound (GBP) following last night’s encouraging Chinese economic data.

As China is New Zealand’s largest trading partner, Chinese retail sales, industrial production and fixed asset investment figures – which all beat forecasts – helped the ‘Kiwi’ climb.

Although Chinese growth figures fell to their lowest in 27 years, last night’s economic data has proved positive for risk-correlated currencies.

Peter Cavanaugh, a Senior Client Advisor at Bancorp Treasury Services, said that Chinese growth figures, along with the US Fed’s expected rate cut, would likely be a “prompt for [China’s] central bank stimulus”, thus benefiting New Zealand’s economy.

Meanwhile, NZD traders will be looking forward to the NZ Consumer Price Index (CPI) figures for the second quarter.

With annual and quarterly figures expected to improve, we could see the ‘Kiwi’ hold on to today’s gains. Analysts have urged caution, however, saying that if inflation data confirms consensus it is unlikely to deter the Reserve Bank of New Zealand’s (RBNZ) expected rates cuts in August.

GBP/NZD Exchange Rate Sinks as UK House Prices Fall for the First Time This Year

The Pound (GBP), meanwhile, fell following the publication of the Rightmove house price index figures for July, which sank for the first time this year.

House price growth fell -0.2, while annual figures also eased by -0.2%.

Miles Shipside, a Director and Housing Market Analyst at Rightmove, commented:

‘With record employment, low interest rates and good mortgage availability, buyers have a lot in their favour apart from the lack of political certainty. [However] the current political climate means that the crucial ingredient of confidence has been impaired, and that is causing some potential buyers and sellers to hesitate.’

GBP/NZD Forecast: Sterling Could Climb if Average Earnings Increase

New Zealand Dollar (NZD) investors will also be looking to Tuesday’s NZ Global Dairy Trade price index.

A decline in dairy prices would be NZD-negative.

Sterling traders, meanwhile, are poised for tomorrow’s UK average earnings figures for May, which are expected to improve.

These will be followed by the UK claimant count change figures for June and a speech by the Governor of the Bank of England (BoE), Mark Carney.

Dovish comments from the BoE chief could temper any GBP/NZD gains.

David Moore

Contact David Moore