GBP/NZD Exchange Rate Softens ahead of British Inflation Data
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While the Pound was fluctuating modestly in response to conflicting Scottish independence surveys, the New Zealand Dollar slipped below the 50 pence per Pound level before the publication of New Zealand’s Performance of Services Index.
On Friday Sterling was bolstered as a second YouGov survey put unionists ahead, and over the weekend prominent British figures (including the Queen) urged Scotland to remain part of the over 300 year union.
Three out of four additional polls also put ‘No’ voters in the lead.
The battle between nationalists and unionists is likely to heat up further before votes are cast on Thursday, and the Pound will be exposed to volatility as a result.
However, as (for the moment) it seems that the ‘No’ camp will emerge victorious; the Pound is performing comparatively well against several of its major currency counterparts.
The NZD/GBP exchange rate fell to a six-week low of 49.94 pence early into South Pacific trading, prompting this comment from market strategist Kymberly Martin; ‘The NZD/GBP now sits just above the psychologically important 50 level. The fate of the cross this week will reside with the outcome of the Scottish independence vote. A ‘no’ vote could see a knee-jerk rebound in the British Pound.’
The weakness in the New Zealand Dollar to Pound exchange rate was also derived from disappointing Chinese industrial production data.
New Zealand relies heavily on China for trade so the news that output was up by 6.9% on the year in August (down from an annual pace of 9% the previous month) put pressure on the commodity-driven ‘Kiwi’.
Before the close of the local session the New Zealand Dollar was also slightly knocked by a decline in a domestic services gauge.
New Zealand’s Performance of Services index remained well above the 50 mark separating growth from contraction in August, but did ease from 58.4 to 57.9.
In a statement issued with the figures, an official with Business New Zealand (responsible for compiling the data) intimated that confidence was still strong. He stated; ‘We’re seeing encouraging resilience in the PSI, consistent with faster-than-average economic growth.’
Last week the Reserve Bank of New Zealand issued some fairly pessimistic comments following its latest interest rate announcement, implying that interest rates will remain on hold for longer than originally projected. However, if New Zealand’s fundamentals impress over the next few weeks the RBNZ may return to its previous rate-hiking cycle.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
The Pound to New Zealand Dollar exchange rate was little-changed this morning following the publication of UK Rightmove House Price data for September.
The figures showed that house prices increased by 0.9% on a monthly basis and 7.9% year-on-year, a bit of a rebound from the less-impressive figures recorded in August.
Tomorrow volatility in the GBP/NZD exchange rate is likely to be triggered by the UK’s Consumer Price Index. Slowing inflation would give the Bank of England more scope for leaving interest rates on hold and would be Pound-negative.
Further fluctuations will occur on Wednesday as the BoE publishes its meeting minutes and the UK releases highly-influential employment data.
During the South Pacific session New Zealand’s second quarter growth report will be in focus.
A stronger-than-projected GDP print could help the New Zealand Dollar rebound.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trading in the region of 1.9989
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 1.9804.
Sterling has softened considerably against the New Zealand Dollar on Tuesday morning as traders await the key British inflation data. The data should provide an interesting outlook on the British economic standing; especially given that the Scottish referendum has clouded perceptions.
With nothing in terms of economic data pertaining to New Zealand, ‘Kiwi’ (NZD) movement is likely to be dictated by foreign currency changes. With the poor Chinese imports data and the falling prices of commodities still having a marked effect on New Zealand’s economic standing, it is unlikely that the ‘Kiwi’ will make any substantial, sustained gains.