Pound New Zealand Dollar Exchange Rate Subdued as Investors Await BoE Rate Decision

(Updated 16:58 03/11/2021)

The GBP/NZD exchange rate has shown a slow rise throughout the day’s session, as gains made by the New Zealand Dollar (NZD) overnight gave way to increased confidence in the Pound (GBP) following the UK’s Service PMI.

The New Zealand Dollar has slowly fallen over the course of the session, as tailwinds from the country’s significant fall in unemployment drop off.

The Pound’s upward trend stabilised as the afternoon went on. This may well have been caused by market hesitancy prior to the Bank of England’s interest rate decision tomorrow.

As of time of writing the GBP/NZD exchange rate is around $1.9146.

Pound New Zealand Dollar Exchange Rate Dips as NZD Buoyed

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell overnight but has now stabilised following the start of the European trading session.

The strengthening of the New Zealand Dollar overnight may have caused the GBP/NZD exchange rate to fall, as the ‘Kiwi’ was boosted by a record fall in unemployment.

Positive PMI returns for the UK meant that the Pound saw a boost this morning which seems to have stabilised the currency pair. A strong day for both currencies could see the rate fall further.

As of time of writing, the GPB/NZD exchange rate sits at around $1.9119.

Pound (GPB) Boosted by Positive PMIs

The Pound has seen some gains today, as the Service PMI for the UK printed above expectation at 59.1%.

Whilst this data is likely to provide a boost for Sterling throughout today’s session, experts have warned that supply chain issues and increased wages may restrict long-term growth as companies see their costs increase.

Duncan Brock, group director at the Chartered Institute of Procurement and Supply, has said companies are worried they won’t be able to attract workers despite a boom in export orders:

‘Escalating business costs remain deeply concerning as salaries rocketed along with fuel and energy costs and material shortages as a result of supply chain disorder. A third of supply chain managers reported stronger job creation as vacancies grew to meet fresh demand, but many struggled to find the right staff from ever-decreasing numbers of job seekers.’

New Zealand Dollar (NZD) Jumps as Unemployment Falls to Record Low

The New Zealand Dollar (NZD) rose steadily overnight after the country’s unemployment rate fell to an all-time low of data of 3.4%. Increased wage growth and a jump in demand has tempered this optimism however, as investors speculate over whether the Reserve Bank of New Zealand intends to raise interest rates to curb inflation

Upward movement in the ‘Kiwi’ was also prompted by a rise in the Global Dairy Trade Price Index to 4.3%, which was well above expectation, and positive returns from China’s service PMIs earlier today.

The New Zealand Dollar has risen with this morning’s trading session, but with no significant data for the rest of the day it is likely that movement of NZD will be prompted by trading within its currency pairs.

Pound New Zealand Dollar Forecast: Will BoE Raise Rates?

Investors are likely to avoid making significant bets on the Pound ahead of the Bank of England’s (BoE) interest rate decision tomorrow.

Whilst it is still uncertain as to what decision the BoE will make, four board members have recently argued for a more hawkish approach. This uncertainty will continue to play a part in the Pound’s movements although forward guidance from the BoE may also affect the currency’s movements today. Announced rate hikes for 2022 are likely to provide a boost to GBP, whereas rates left unchanged could lead to market confidence in The Pound falling.

The rest of the week shows no further significant data for the New Zealand Dollar but the record fall in unemployment may fuel speculation over further interest rate hikes by the RBNZ. This speculation may drive movement in the ‘Kiwi’, as well as the potential for more risk-on trading in NZD following its performance overnight.

Gareth Monk

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