Pound Sterling New Zealand Dollar Update: Better-than-Expected Services Result Fails to Raise GBP NZD Conversion Rate
The British Pound to New Zealand Dollar exchange rate remained above its worst levels on Thursday afternoon, but began to slip back towards them again as forex markets indulged in yet another GBP selloff.
Demand for the US Dollar has continued to improve over the last week, which has limited demand for the risky New Zealand Dollar.
GBP/NZD remained trading in the region of an over 10-year low, with GBP struggling across the board owing to the sheer scale of the negativity caused by the weekend’s Article 50 news.
A slump in the ANZ Truckometer Heavy was not enough to boost the Pound to New Zealand Dollar exchange rate, despite risk appetite remaining limited.
Worries over the outlook of the UK economy and the apparently hard line being taken by policymakers on Brexit have continued to drag on the Pound on Thursday morning.
GBP NZD mounted a solid recovery attempt on Wednesday afternoon as Sterling recovered slightly from its selloff while the ‘Kiwi’ was weakened by an increase in demand for the US Dollar.
At the time of writing, GBP NZD had almost recovered to the week’s opening levels, making it one of the better-performing Pound exchange rates this week despite remaining near record-lows.
In terms of domestic data, the Pound should have been aided slightly today, as the services PMI for September only dipped from 52.9 to 52.6, instead of to the forecast 52.5 figure.
Elsewhere, Bank of England (BoE) official Ben Broadbent has issued a defence of the BoE’s historic rate cut that came in September, stating that the wide range of UK domestic data has the potential to cloud the judgement of investors and economists.
Latest Pound/New Zealand Dollar Exchange Rates
Pound Sterling (GBP) Currency Predictions: Volatility Possible on Friday’s UK Trade and Manufacturing Stats
The next UK data with the potential to impact the Pound Sterling New Zealand exchange rate will come on Friday, when the morning will see the Halifax house price index for September announced alongside the August trade balance and industrial and manufacturing results.
House prices are forecast to rise on the month but dip on the year, while the trade balance result has a positively-predicted deficit reduction expected from -4.5bn to -3.1bn.
Looking at the annual production results, a rise is expected for the manufacturing result compared to an expected decline for the industrial variant.
New Zealand Dollar (NZD) News: Losses Continue after Global Dairy Price Decline
The New Zealand Dollar’s (NZD) performance this week has actually been fairly poor against non-Sterling peers, on account of the recent decline in global dairy prices and positive news out of the US.
Regarding the dairy auction, the latest movement has been a shift down, with a damaging -3% drop taking the place of a prior 1.7% rise at the end of September.
From further afield, the recent statement from Fed official Charles Evans that a US interest rate hike is likely this year has only amplified existing uncertainties among NZD investors.
Pound Sterling New Zealand Dollar Outlook: External Factors to Dominate NZD Movement in Near-Term
In the short term, external developments and UK economic news is likely to be the main cause of GBP NZD exchange rate fluctuations.
The next New Zealand domestic data isn’t due until the coming Wednesday, when the night will see the announcement of the business NZ PMI for September, as well as the food inflation result on the year for the same month. As it stands, a rise from 55.1 to 55.58 has been predicted for the PMI result.
Elsewhere, fluctuations in the cost of milk are expected to trigger movement over the rest of the week, as well as any signs of a clear victor emerging in the US Presidential Election.
Developments in the US that could also impact the ‘Kiwi’ will come tonight, when Fed official Jeffrey Lacker speaks, potentially to reiterate the need for a near-term US interest rate hike.
GBP NZD Focus: Markit Analyst Questions Future BoE Policy Action
With the UK’s latest services PMI showing a better-than-expected result, Markit Chief Business Economist Chris Williamson has questioned whether the Bank of England will choose to perform any further easing measures, such as interest rate cuts. Remarking on the services result, Williamson said;
‘The solid PMI readings for September will cast doubt on the need for any further stimulus from the Bank of England in coming months. It’s clear, however, that the pace of expansion has cooled since the first half of the year, reflecting widespread concern about the potential future impact of Brexit’.
If the BoE does steer clear of further easing measures, Pound Sterling (GBP) may be able to attempt a recovery against its main rivals, including the New Zealand Dollar (NZD).