GBP/NZD Exchange Rate Muted Following Upbeat NZ Jobs Report
The Pound to New Zealand Dollar (GBP/NZD) exchange rate has opened today’s session on the defensive, after New Zealand reported a surprise drop in unemployment.
At the time of writing the GBP/NZD exchange rate is trading at around NZ$1.9696, down roughly half a cent from yesterday’s best levels.
New Zealand Dollar (NZD) Buoyed by Surprise Fall in Unemployment Rate
The New Zealand Dollar (NZD) struck higher during the Asian session on Wednesday in response to some outstanding domestic employment figures.
According to data published overnight by Statistics New Zealand, the domestic unemployment rate actually fell in the second quarter, dipping from 4.2% to 4% versus forecasts it would soar to 5.8%.
Given this came amidst the height of the coronavirus pandemic and a strict national lockdown the figures are a welcome surprise to NZD investors.
New Zealand’s Finance Minister, Grant Robertson hailed the figures as a vindication of the government’s approach to containing the coronavirus outbreak.
Robertson said:
‘Being able to reopen our economy sooner has saved jobs. It is proof that getting on top of the virus is the best thing we can do for our economy.’
While the headline figures made for impressive reading, analysts struck a more cautious note.
This is because the report also revealed that underemployment rose in the three months to June, while the number of people searching for work has fallen.
Analysts also warn the government’s wage subsidy scheme, which has helped to keep New Zealanders employed through the pandemic, is set to conclude in September and could result in a sharp rise in jobless numbers.
Pound (GBP) Steady as UK Business Activity Strikes Five-Year High
At the same time, the Pound (GBP) has shrugged off its initial weakness this morning, following the publication of the UK’s latest services PMI.
July’s finalised release confirmed that the growth in the UK’s vital service sector surged to a five-year high as lockdown measures continued to be eased.
Tim Moore, Economics Director at IHS Markit, commented:
‘UK service providers are starting to see light at the end of the tunnel after a record slump in business activity during the second quarter of 2020. July data revealed the fastest increase in business activity for five years, which adds to signs of recovery across the manufacturing sector this summer.’
While today’s figures paint an upbeat picture of the UK’s economic recovery, the figures continued to be tempered by warning of an impending unemployment crisis once the UK government’s furlough scheme comes to a close in October.
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