Weaker Pound To NZ Dollar Exchange Rate Pessimistically-Predicted UK Data Looms

Published: 20 Oct 2017 21:24 Currency Markets

British pound to new zealand dollar exchange rate forecast

While expectations are rising for both the BoE and RBNZ to cut interest rates in August the Pound has been making some strong gains against the New Zealand Dollar today.

The near-term outlook for the pound sterling to New Zealand dollar exchange rate looks dim, on account of the latest economic predictions.

For the UK’s GDP growth rate for the second quarter, the preliminary printing is expected to dip from 2% to 1.9% on the year. In addition, more damage from the Confederation of British Industry (CBI) is expected in the form of a Q3 drop in the business optimism index from -5 to -11.

A larger-than-forecast narrowing of the New Zealand trade surplus failed to put particular downside pressure on the NZ dollar exchange rates today, with risk appetite generally on the rise.

Increasing speculation that the Bank of England will cut interest rates to a fresh record low next week has been weighing heavily on the Pound, meanwhile.

Although little has recently emerged to benefit the Pound, the UK currency has nonetheless managed to advance against the New Zealand dollar.

This is more likely due to a lack of support for the NZD, than any real positive developments for the Pound.

The appeal of the NZD exchange rates has likely been worsened due to the latest US data concerning manufacturing not printing as poorly as had been forecast.

Although the GBP/NZD exchange rate remained on an uptrend on Monday morning some of its earlier gains were erased by unexpectedly poor domestic data.

While investors had anticipated the CBI Business Optimism Index to slide markedly in response to Brexit-based uncertainty the slump from -5 to -47 proved a distinctly discouraging signal.

ADVERTISEMENT
foreign exchange rates
Foreign currency investors dumped the British Pound (GBP) ahead of the weekend, thanks to a particularly discouraging round of UK economic data.

The flash Manufacturing, Services and Composite PMIs for July all pointed towards a significant slowdown in economic activity, raising fears that the UK could be at risk of falling into a technical recession in the wake of the Brexit vote.

This dovishness of the first post-referendum gauge of the UK economy prompted the Pound to New Zealand Dollar (GBP/NZD) exchange rate to weaken, slumping to fall back from a three-week high.

GBP to NZD exchange rate chart

Latest Pound/New Zealand Dollar Exchange Rates

On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

The GBP to GBP exchange rate converts at 1 today.

The GBP to USD exchange rate converts at 1.261 today.

Today finds the pound to australian dollar spot exchange rate priced at 1.936.

NB: the forex rates mentioned above, revised as of 29th Mar 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.

New Zealand Dollar (NZD) Exchange Rates Stay Weak on Strengthening USD

Confidence in the New Zealand Dollar (NZD), however, has been generally limited in recent days thanks to the strength of the US Dollar (USD) and the growing conviction that more policy easing is imminent.

Signs of softening domestic confidence and persistently weak inflationary pressure have put increasing pressure on the ‘Kiwi’, particularly in the wake of the Reserve Bank of New Zealand’s recent Economic Assessment update.

As Imre Speizer, Research Analyst at Westpac, noted:

‘Consequently, the RBNZ sounded even more dovish about the path for interest rates over the year ahead than they were back in June, commenting that “it seems likely that further policy easing will be required”. The RBNZ didn’t mince its words when it said a “decline in the exchange rate is needed”. With such unequivocal guidance, it’s unsurprising that markets have reacted to the past week’s developments so decisively.’

With markets now pricing in a very high likelihood of a RBNZ rate cut in August there has been little reason to support the softened New Zealand Dollar.

NZD to GBP exchange rate chart

Weaker New Zealand Trade Data Forecast to Benefit GBP/NZD Exchange Rate

Overnight the GBP/NZD exchange rate could receive a further boost from the latest raft of New Zealand trade data, which is not expected to encourage particular confidence.

Exports are forecast to have fallen in June, a development that is likely to have narrowed the trade surplus and hampered domestic economic strength as a result.

Any upside surprise could offer a rallying point to the ‘Kiwi’, although the extremely dovish tone of the RBNZ is likely to keep the appeal of the currency generally muted ahead of the August policy meeting.

UK GDP Data Expected to Drive Further Pound Sterling Volatility

Wednesday’s second quarter UK GDP is likely to provoke volatility for Sterling, despite the fact that the measure is largely outdated thanks to developments in the wake of the EU referendum.

While investors anticipate that growth ticked modestly higher from 2.0% to 2.1% any progress is likely to have been reversed in the turmoil since the Brexit vote, which could limited any resultant Pound strength.

Should GDP fail to show the expected signs of strength, however, the GBP/NZD exchange rate is likely to weaken substantially as the case for the Bank of England (BoE) to ease policy would receive another boost.

Advertisement

Save money on your currency transfers with TorFX, voted International Money Transfer Provider of the Year 2016 - 2022. Their goal is to connect clients with ultra competitive exchange rates and a uniquely dedicated service whether they choose to trade online or over the telephone. Find out more here.

Related News

Pound to Euro Forecast for Next Week: Will UK Budget 2024 Impact GBP/EUR Exchange Rate?

Pound to Euro Forecast for Next Week: Will UK Budget 2024 Impact GBP/EUR Exchange Rate?

GBP

March 04 2024

Quick Take:The GBP/EUR exchange rate fluctuated last week due to changing bets on interest rate cuts by central banks, with little change from Friday's opening. The Pound saw...


Pound to Dollar End-of-Week Forecast: "Low/mid-1.25 Zone Looks Likely" say Scotiabank

Pound to Dollar End-of-Week Forecast: "Low/mid-1.25 Zone Looks Likely" say Scotiabank

GBP

March 23 2024

The British Pound lost further ground against the Euro and USD Dollar after Friday’s European open with increased speculation that the Bank of England would cut interest...


Pound to Euro: "Coming Months Could Provide Sweet Spot for GBP" say BofA Forecasters

Pound to Euro: "Coming Months Could Provide Sweet Spot for GBP" say BofA Forecasters

GBP

March 02 2024

There was choppy trading for the Pound Sterling and Euro against the U.S. Dollar (USD) in New York on Thursday, but the GBP to EUR exchange rate was again held in narrow...


Top Global FX Exchange Rate Forecasts - Latest Data Projections From Financial Institutions and Market Analysts

Euro to Dollar forecastPound to Euro forecastPound to Dollar forecastEuro to Pound forecastUS Dollar to Canadian Dollar forecastUS Dollar to Yen forecastAustralian Dollar to US Dollar forecast