Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls after Disappointing US Data
(Updated 16:40 20/04/23)
The Pound New Zealand Dollar (GBP/NZD) has slipped from its earlier highs over the course of the day. A persistent risk-off mood may limiting any losses for the pairing.
A pullback in the US Dollar (USD) could be behind the exchange rate’s decline today. The New Zealand Dollar’s correlation to the currency saw a boost for the ‘Kiwi’.
The potential for more political turmoil in the UK may also be weighing on GBP/ZAR today. A report into allegations concerning UK Deputy Prime Minister Dominic Raab was published earlier in the day, with press now awaiting PM Rishi Sunak’s decision.
At time of writing the GBP/NZD exchange rate is at around NZ$2.0100, which is down roughly 0.3% from this morning’s opening figures.
Original article continues below:
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Hits 14-Month High amid Risk-Off Mood
The Pound New Zealand Dollar exchange rate is trading at a 14-month high today. Softer-than-forecast New Zealand inflation data for the first quarter may have buoyed the pairing overnight.
Persistent Bank of England (BoE) rate hike bets could have also bolstered GBP/NZD, although a lack of data is prompting subdued movements in the pair today.
At time of writing the GBP/NZD exchange rate is at around NZ$2.0177, which is virtually unchanged from this morning’s opening figures.
New Zealand Dollar (NZD) Tumbles Overnight after Softer-Than-Forecast Q1 Inflation Data
The New Zealand Dollar (NZD) is seeing subdued movements after nosediving overnight. NZD may be seeing losses after disappointing inflation data. Additionally, a retreat in global risk appetite and a downbeat mood in the commodity markets may be weighing on the ‘Kiwi’.
First quarter inflation in New Zealand cooled by more than forecast, easing to 6.7%. The decline was largely driven by lower fuel prices.
Price pressures remained historically high despite this, with inflation still at levels not seen since the 1990s. The first quarter inflation data was still more than double the upper limits of the Reserve Bank of New Zealand’s (RBNZ) target range.
However, markets are now anticipating a dovish surprise at the central bank’s next meeting. The prospect of a slowdown in policy tightening from the RBNZ could be keeping pressure on the ‘Kiwi’ today.
Pound (GBP) Supported by BoE Rate Hike Bets
The Pound (GBP) is moving in a limited range today. A risk-off market mood may be capping any gains for Sterling.
GBP may be continuing to find support from bets on a 25bps interest rate hike from the Bank of England (BoE) at their next meeting. The release of hotter-than-expected inflation data on Wednesday could still be lending support to Sterling.
UBS economist Anna Titareva said:
‘In light of the strong March labour market report and CPI inflation data, both signalling slower-than-expected improvement, we now expect the BoE to deliver one more 25bp rate hike in May, bringing Bank Rate to 4.5% with the policy rate decisions after that remaining highly data dependent on the labour market and inflation data.’
GBP/NZD Exchange Rate Forecast: Will UK Retail Slump Pull Pound Lower?
The Pound could see mixed movements on Friday following the release of the latest retail sales data. March’s sales volumes are expected to slip by 0.5% after February’s surprise increase of 1.2%. Sterling may slip in the immediate aftermath of the data.
On the other hand, the latest output data for the UK’s private sectors could push GBP higher on Friday. Performance in the country’s manufacturing sector is expected to have improved in April. Additionally, the UK’s dominant services sector is forecast to remain in positive territory which provide an additional boost to the Pound.
BoE rate hike bets may also inspire movement in Sterling over the remainder of the week. Markets have largely pricedin a 25bps hike from the central bank at their May meeting.
The New Zealand Dollar will see no other data releases this week. The ‘Kiwi’ could continue to see losses if market mood remains cautious.
NZD’s correlation to the Australian Dollar (AUD) could also inspire movement in the currency.
Finally for the New Zealand Dollar, the reaction to the first quarter inflation data could continue to weigh on the currency. NZD could come under further pressure if markets continue to pare back their bets on further rate hikes from the RBNZ.