Pound New Zealand Dollar (GBP/NZD) Exchange Rate Plummets amid Risk-On Mood
(Updated 16:44 20/01/23)
The Pound New Zealand Dollar (GBP/NZD) exchange rate continued to tumble today. A return of global risk appetite may have weighed on the pairing and prompted further losses.
The exchange rate may have continued to find support from Bank of England rate hike bets, however.
At time of writing the GBP/NZD exchange rate is at around NZ$1.9163, which is down roughly 1.1% from this morning’s opening figures.
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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Slumps after Poor UK Retail Data
The Pound New Zealand Dollar (GBP/NZD) exchange rate is tumbling today. The pairing is potentially being pulled lower by a surprise slump in the UK’s December retail sales.
GBP/NZD may also be seeing losses amid increased bets on further interest rate hikes from the Reserve Bank of New Zealand (RBNZ).
At time of writing the GBP/NZD exchange rate is at around NZ$1.9211, which is down roughly 0.8% from this morning’s opening figures.
Pound (GBP) Fall as Retail Sales Unexpectedly Fall in December
The Pound (GBP) is slipping today after an above-forecast slump in UK retail sales. The UK’s poor forward outlook may also be pulling Sterling lower.
UK retail sales bucked positive forecasts to fall by 1% in December versus the expected rise of 0.5%. Sales in December saw their biggest fall since 1997 as households cut back on spending amid a cost-of-living crisis.
Businesses had been hoping for a festive boost in December. The data added to fears of a deep recession for the UK in 2023.
Sterling may be finding support from bets on a 50bps interest rate hike from the Bank of England (BoE), however. A recent slump in natural gas prices has led to predictions that the BoE may continue with more aggressive rate hikes.
New Zealand Dollar (NZD) Bolstered by RBNZ Rate Hike Bets
The New Zealand Dollar (NZD) is climbing today. The ‘Kiwi’ could be seeing gains from a healthy risk appetite today. NZD’s correlation to the Australian Dollar (AUD) may also be boosting the currency.
Bets on further interest rate hikes from the RBNZ may also be pushing NZD higher today. The latest food inflation data on Wednesday saw prices in December rise to its highest point in 33 years. Analysts are expecting inflation in the country to remain persistently high.
Infometrics principal economist Brad Olsen said:
‘I’m still of the view that at the moment, looking at talking to businesses, seeing all the numbers come through, there’s no evidence so far that inflation in New Zealand is going to peak and roll over quickly.’
GBP/NZD Exchange Rate Forecast: Will Further Downbeat Retail Sector Data Add to UK’s Gloomy Outlook?
With no other data releases today, the Pound may be affected by the negative sentiment surrounding the UK’s long-term outlook. The announcement of further strike action may also weigh on Sterling.
Looking to the coming week for GBP, an expected further downturn in public sector performance on Tuesday could pull the Pound lower if January’s PMIs print as forecast.
The latest distributive trades figures from the Confederation of British Industry (CBI) could see further losses for Sterling. Following today’s disappointing retail sales figures, the predicted slip in January’s reading may add to the sector’s poor outlook.
For the New Zealand Dollar, a lack of data today means that the currency is likely to see movement from any significant shifts in risk appetite.
Looking ahead for NZD, the latest indicators of service sector performance on Monday could bolster the ‘Kiwi’ if they print as expected. December’s PSI reading is set to print in positive territory, although the expected slowdown could limit gains.
A predicted slip in fourth quarter inflation on Tuesday could see NZD shed some of its earlier gains, however. The cooler inflation data could limit bets on any further interest rate hikes from the RBNZ.
Finally for NZD, a forecast poor reading of January’s business confidence could also weigh on the currency on Friday.