Pound New Zealand Dollar (GBP/NZD) Exchange Rate Continues Climbing amid Cheery Trade
(Article updated 16:12, 3/5/23) The Pound New Zealand Dollar (GBP/NZD) is strengthening this afternoon, as the market mood remains cautiously upbeat.
The cheery trade appears to be swaying in favour of Sterling, allowing GBP to gain ground against most major peers without a clear data driver. The upbeat mood is likely continuing from the tentative optimism towards the Federal Reserve’s rate hike this evening.
Widely expected to be the Fed’s final notch of tightening, markets appear to be breathing a sigh of relief as growth prospects for the global economy depressurise.
At the time of writing, GBP/NZD is trading at around NZ$2.0121, a rise of roughly 0.4% from the morning’s opening rates.
Original article continues below:
Pound New Zealand Dollar Exchange Rate Firms despite Upbeat NZ Labour Data
The Pound New Zealand Dollar exchange rate is strengthening this morning, despite upbeat labour market data underpinning NZD.
At the time of writing, GBP/NZD is trading at around NZ$2.0086, a rise of roughly 0.2% from the morning’s opening rates.
New Zealand Dollar (NZD) Underpinned by Upbeat Labour Data
The New Zealand Dollar (NZD) is being underpinned this morning by last night’s upbeat employment data.
For instance, the unemployment rate for Q1 held at 3.4%, below forecasts of an increase to 3.5%. Similarly, employment was seen to have increased on a quarterly basis by 0.8%.
With inflation remaining a sticking point, this suggests that the Reserve Bank of New Zealand (RBNZ) will hike rates again. As the tight labour market has been suggested as a key reason for price pressures, the RBNZ is aiming to curb demand.
Mark Smith, Senior Economist at ASB Bank, commented:
‘Labour cost growth was not as strong as expected, but still hit a record annual high with widespread lifts. Both weaker demand and stronger supply should see greater labour market slack emerge over 2023, but the RBNZ is unlikely to shirk from further monetary tightening.’
Elsewhere, a mixed market mood could be limiting the risk-sensitive ‘Kiwi’s gains this morning. Investors are looking ahead to the Federal Reserve’s interest rate decision later today. Further tightening could weaken the global economy, which may sour the market mood.
Pound (GBP) Lifted amid Cautiously Upbeat Trade
This morning, cautiously optimistic trade appears to be bringing tailwinds for the Pound (GBP). Ahead of the Federal Reserve’s latest interest rate decision this evening, markets appear broadly uncertain of a direction.
The primary thinking amongst investors is that today’s 25bps hike is likely to be the Fed’s final hike. Because of this, the pressure may ease on global economic growth, leading to modestly cheery trade.
Whether or not Sterling’s strength carries on throughout the session, as a lack of data releases may leave GBP vulnerable.
Furthermore, continued rate hike bets could be serving to underpin Sterling. With the Bank of England (BoE) expected to hike rates by 25bps, GBP investors may be awaiting a return on investment.
GBP/NZD Exchange Rate Forecast: Chinese Manufacturing Uptick to Buoy NZD?
Looking ahead for the New Zealand Dollar, the core catalyst of movement is likely to come from China’s Caixin manufacturing index.
Forecast to show a minor uptick and rise to 50.3, this could aid NZD due to the country’s close trading links.
Meanwhile, data remains thin on the ground for Sterling. Because of this, domestic and external factors are likely to be the key drivers.
However, the final services PMI reading for April is due to print tomorrow. If this surprises to the upside, it could bring cheer to GBP investors.
Elsewhere, market sentiment is likely to play a key role in shaping GBP/NZD. The Federal Reserve publish their latest interest rate decision tonight, a souring market mood could drag the risk-sensitive ‘Kiwi’.