News of fresh measures to cool New Zealand’s hot housing market thwacked the New Zealand Dollar (NZD) overnight, and the Pound New Zealand Dollar (GBP/NZD) exchange rate has surged as a result.
Investors were hit with taxes as New Zealand housing affordability hit lowest-ever levels. This left markets even more convinced that the Reserve Bank of New Zealand (RBNZ) would also remain dovish for a long time to come.
Meanwhile, the Pound was supported by reassuring UK job market data published this morning. The data showed the unemployment rate improving to 5.0%.
Last Week: GBP/NZD Volatility as Market-Sentiment Rises
The Pound and New Zealand Dollar both saw strong demand last week.
While the Pound continued to be supported by coronavirus pandemic recovery hopes and optimism from the Bank of England (BoE), the New Zealand Dollar was supported by the latest Federal Reserve news.
The Fed took a dovish stance, signalling that US monetary policy would remain loose for a while. This made investors more willing to take risks and boosted the New Zealand Dollar for most of the week.
Ultimately, GBP/NZD closed the week fairly close to its opening levels.
Three Things to Watch For This Week
- New Zealand Trade Report
New Zealand is a trade-heavy nation, so upcoming New Zealand trade balance data tonight could influence New Zealand Dollar movement if it surprises.
- UK PMI Projections
Wednesday will see the publication of Britain’s March PMI projections. They will give investors a better idea of how Britain’s economy has been performing this month as restrictions begin to lighten.
- UK Retail Sales
Britain’s February retail sales results are due on Friday. This will be one of the most notable datasets of the week, and a surprisingly poor retail report could hit the Pound lower.
Most of this week’s influential data is from the UK. With the New Zealand Dollar weaker on New Zealand’s housing market situation, GBP/NZD is only likely to fall if upcoming UK data disappoints investors.