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GBP to NZD Exchange Rate Recovers Ground, Volatility Forecast

British Pounds

The Pound (GBP) to New Zealand Dollar (NZD) exchange rate is trending around 1.9819, drifting between a low of 1.9792 and a high of 1.9846. Movement is currently insignificant, probably as a result of continued negative sentiment towards Sterling.

Those traders backing the Pound will be pleased to see the back of last week. Despite Friday’s positive construction data, which saw output rise from a forecast 4.7% to 5.3%, sentiment waned as Trade Balance figures proved to be less than anticipated. Total Trade Balance showed an increase from the forecast figure of -£2050 to -£2459. Similarly Visible Trade Balance showed a gain to -£9413 from the forecast figure of -£8900.

The performance of the Pound has been further negatively affected by growing geopolitical tensions in Iraq after President Barack Obama approved the use of air-strikes. Similarly the situation in Russia, following the sanctions backed by UK politicians, has forced traders to flock towards safe haven currencies.

The Russian retaliation to reject Western food imports will have serious consequences for several UK firms. An example of this is Scottish firm Lunar, a fishing and fish processing business, who make half of their 60 million annual turnover from exporting to Russia.

Lunar boss Sinclair Banks stated; ‘It will have a big impact on business […]We’ve £200,000 of herring sitting at St Petersburg, we don’t know if it will go through or even if it will be paid for’.

Today’s Lloyds Employment Confidence survey, whilst not having much bearing on the movement of the Pound, shows an increase from 1 to 6 which suggests confidence in the UK’s employment outlook.

Having similarly disadvantageous ramifications for the Pound is the ongoing Scottish independence situation. Until the unknown becomes known, traders will be reluctant to back Sterling ahead of next month’s referendum.

The situation in Iraq has not been good for the ‘Kiwi’ (NZD) either. Friday’s announcement of the US Presidents approval of air-strikes led the New Zealand Dollar to fall along with its Antipodean counterpart, as did many other currencies world-wide.

The pairing is trending around 1.9839.

GBP to NZD Forecast for the Coming Days

Wednesday will see some important UK data released. Average Weekly Earnings will hold weight economically, especially to gauge correlation between employment data and earning potential. Employment Change and Claimant Count Rate is likely to affect Sterling movement. The ILO Unemployment Rate is perhaps the most important of Wednesday’s UK data releases. This is because increased consumption will accelerate economic growth, but can heighten inflationary pressures. It is currently forecast to dip slightly to 6.4% from the previous figure of 6.5%.

The Bank of England (BoE) Inflation Report is another of Wednesday’s important data releases pertaining to UK economic standings. The report sets out the detailed economic analysis and inflation projections on which the Bank’s Monetary Policy Committee bases its interest rate decisions, and presents an assessment of the prospects for UK inflation.

In terms of New Zealand data releases Wednesday’s Performance of Manufacturing Index will be of importance. Also the Retail Sales Ex Inflation figures will be of interest, which is forecast to rise from 0.7% to 1.0%.

The GBP to NZD exchange rate has hit a high today of 1.9846.

UPDATED 10:05 GMT 12 August, 2014

Pound Sterling to New Zealand Dollar Exchange Rate Up Over 0.25%

During the Australasian session the GBP/NZD exchange rate rallied by more than 0.25% as New Zealand’s House Price Index fell by 0.7% on a month-on-month basis in July.

This followed a previous decline of -0.3%.

On the year domestic house sales were down by -13.0%, a steeper drop than the previous month’s annual decline of -6.1%.

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 1.9900