Pound New Zealand Dollar (GBP/NZD) Exchange Rate Sheds Inflation Gains
The Pound New Zealand Dollar (GBP/NZD) exchange rate is trading sideways this morning. Sterling has shed some of yesterday’s gains while the ‘Kiwi’ is subdued despite upbeat GDP data.
At the time of writing the GBP/NZD exchange rate is trading narrowly this morning at around 1.9192, barely moving from this morning’s opening rate.
Pound (GBP) Sheds Yesterday’s Inflation Gains
The Pound (GBP) seems subdued this morning, shedding its gains from yesterday’s inflation inspired boost.
Yesterday’s mixed inflation data saw the Pound rapidly gain against most other currencies as core inflation climbed to a new 30-year high of 6.3%.
However, a lack of UK data releases leaves the Pound without fresh impetus for movement.
In the absence of any data UK investors are left to digest the weeks high impact data. These include yesterday’s inflation figures and the positive print from the UK’s job report from earlier in the week.
These data pieces are helping to fuel GBP investors’ rate hike bets ahead of the Bank of England’s interest rate decision next week.
Investors and economists are betting on a 75bps hike, which seems likely given the upbeat data from this week.
In the absence of any trading stimuli, the subdued mood amid a period of national mourning could also limit any upside in the Pound today.
New Zealand Dollar (NZD) Downbeat Despite
The New Zealand Dollar (NZD) is also trading narrowly this morning despite New Zealand’s latest GDP figures printing above expectations.
New Zealand’s economy rebounded at a faster-than-expected pace in the second quarter. With economic growth jumping from -0.2% to 1.7%. The boost in growth was largely driven by transport, specifically air travel, and exports.
However, economists are expecting future GDP readings to be volatile, with analysts still concerned about validity of the Covid rebound.
Mark Smith, senior economist at ASB Bank in Auckland has stated that:
‘Subsequent GDP prints are expected to remain volatile as the economy continues the process of transitioning back to pre-Covid-19 norms […] The pace of growth will slow, but base momentum should remain decent.’
Pound New Zealand Dollar Exchange Forecast: Exchange Muted by Poor Data?
Looking ahead the Pound New Zealand (GBP/NZD) exchange rate could remain muted by poor data.
New Zealand’s business PMI figures are expected to print during overnight trade. The figures are forecast to drop from 52.7 to 52.5. Whilst avoiding a contraction this slowing of growth could weigh on NZD.
Aside from this release, the New Zealand Dollar could also be driven by market risk appetite. A cautious mood likely weighing on the ‘Kiwi’.
Friday sees the release of the UK’s sale figures and they are also expected to report a sizable slump in sales growth. August’s figures are forecast to report sales dropped from 0.3% to -0.5%.
The slump could revive concerns over the UK’s economic outlook, leaving Sterling to limp over the finishing line this week.