The Pound New Zealand Dollar (GBP NZD) exchange rate fell this morning despite a rise in Consumer sentiment as markets predict a dramatic drop in spending in the New Year.
Pound New Zealand Dollar (GBP NZD) Falls Despite Rise in Consumer Confidence
GfK’s Consumer Confidence data reported a better than expected lift in sentiment this morning as it rose from -8 to -7 in December. However, despite an initial spike in the Pound following its release, the GBP NZD exchange rate was unable to stabilise and quickly fell again.
The fall was largely attributed to expectations that consumer spending will plummet in 2017, as prices rise dramatically thanks to the decline in value of the Pound after ‘Brexit’. The recent bump in confidence is due to consumers wishing to purchase more expensive items like electronics in December before prices rise. As Joe Staton, Head of Market Dynamics at GfK explains;
‘Looking ahead to 2017, against a backdrop of Brexit negotiations, the decline in the value of Sterling, and the prospect of higher inflation impacting purchasing power, we forecast that confidence will be tested by the storm and stress of the year to come.’
New Zealand Dollar Pressured by Disappointing GDP
The New Zealand Dollar was also pressured this morning as disappointing GDP figures weighed on the antipodean currency.
New Zealand’s latest GDP report saw a rise from 3.4% to 3.5% in the third quarter, reaching its highest levels since Q4 2014, but fell short of predictions that growth would rise to 3.6%.
The news did little to boost the ‘Kiwi’, which has suffered recently as market risk appetite has been stifled by the strengthening of the US Dollar (USD), following the Federal Reserve’s hawkish rate hike last week.
GBP NZD Forecast: UK to Release GDP Data on Friday
The Pound to New Zealand Dollar exchange rate may tick higher tomorrow following the release of the UK’s latest GDP figures, which are forecast to show that the British economy grew from 2.1% to 2.3% in the third quarter, although if the GDP report were to disappoint in the same way New Zealand’s own GDP data did, this could send Sterling lower.
Meanwhile a lull in data over the Christmas period may drag on the high-yield New Zealand Dollar as it faces declining commodity prices and increasing risk aversion.
Current Interbank Exchange Rates
At the time of writing the GBP NZD exchange rate was trending around 1.79 and the NZD GBP exchange rate was trending around 0.55.
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