The Pound New Zealand Dollar (GBP NZD) exchange rate jumped by over a cent last night as the ‘Kiwi’ was struck by some disappointing economic data.
New Zealand Dollar (NZD) Tumbles as Data Disappoints
The New Zealand Dollar plummeted in overnight trade on Tuesday as investors were disappointed by both a sizeable drop in dairy prices and an unexpected rise in the domestic trade deficit.
The ‘Kiwi’s initial loses were prompted by a substantial drop in prices at the latest GlobalDairyTrade auction, with the overall dairy index plummeting by 3.9% and whole milk powder prices sliding 2.5%.
With dairy products accounting for over 20% of New Zealand’s total exports the latest drop came as a major blow, and looks to end 2017 on quite a negative note for dairy farmers.
Further weakening NZD overnight was the publication of New Zealand’s latest trade balance, with investors disappointed to learn that the nation’s trade deficit actually rose in November rather than narrowing as many economists had forecast.
According to data compiled by Statistics New Zealand the domestic trade deficit widened from NZ$843m to NZ$1.1bn last month, missing expectations that it would fall to NZ$550m, despite exports actually rising.
Westpac Bank senior strategist, Imre Speizer, said;
‘It was the big surprise in imports, although the exports also did very well. There was an immediate knee-jerk response to the headline numbers.’
Pound (GBP) Stable as Investors Await IMF Assessment
Sterling is holding steady this morning ahead of the of the International Monetary Fund (IMF) latest annual health check on the UK’s economy.
Christine Lagarde, head of the IMF will speak in London later today to deliver the Fund’s review on how the UK economy is faring.
Investors are likely to pay close attention to her speech as they look to learn what sort of impact the IMF expect Brexit will have on the UK economy.
GBP NZD Forecast: CBI Retail Data to Weaken Sterling?
Looking ahead the GBP NZD exchange rate may be forced to retreat later this afternoon as the Confederation of British Industry (CBI) publishes its latest distributive trade index, which is expected to show that UK retail activity slowed slightly this month after the success of the Black Friday sales in November.
Meanwhile the New Zealand Dollar may slump again later tonight as New Zealand releases its third quarter GDP figures, with economists forecasting that economic growth will have slowed from 0.8% to 0.5%.
Current Interbank Exchange Rates
At the time of writing the GBP NZD exchange rate was trending around 1.9208 and the NZD GBP exchange rate was trending around 0.5209.
Comments are closed.