Pound New Zealand Dollar Exchange Rate Struggles to Advance as GBP Looks for More Support
Despite a shift away from risk-sentiment today, the Pound New Zealand Dollar (GBP/NZD) exchange rate is struggling to make much of an advance. Sterling’s (GBP) outlook remains strong overall, but today’s UK inflation report did little to boost it higher.
Last week saw GBP/NZD open at the level of 1.9494 before spending most of the week tumbling lower. GBP/NZD even touched on a low of 1.9183, the worst level for the pair in over a month, before steadying and closing the week at the level of 1.9370.
This week’s movement has been more mixed and narrow so far. The GBP/NZD rebound attempt seen at the beginning of the week was short-lived, and at the time of writing GBP/NZD is trending in the region of 1.9401.
UK retail and PMI data due nearer the end of the week could also influence the Pound to New Zealand Dollar exchange rate outlook.
Pound (GBP) Exchange Rates Struggle to Advance as UK Inflation Misses the Mark
Investors have been hesitant to keep piling into the Pound this week. Analysts believe that much of the Pound’s optimistic outlook has already been priced in, which means Sterling lacks the drive to climb further.
As a result, today’s UK inflation rate report falling short of expectations did little to boost the Pound’s appeal either. The yearly inflation rate came in at 0.7% for March, rather than the expected 0.8%.
On top of this, some analysts believe that UK inflation will not rise enough to support a shift in stance from the Bank of England (BoE).
New Zealand Dollar (NZD) Exchange Rates Calm as Domestic Inflation Beats Forecasts
Today’s Asian session saw the publication of New Zealand’s Q1 inflation rate results. The data came in just above forecasts in both quarterly and yearly prints, offering the New Zealand Dollar a little support.
While many risk and trade-correlated currencies were hit lower by signs of rising coronavirus infections in Asia, the New Zealand Dollar avoided big losses.
Analysts predict that New Zealand’s inflation outlook shows no sign of overheating just yet. According to Mark Smith, Senior Economist at ASB:
‘Inflation outlook is still inherently uncertain and there are few signs of the economy overheating,
The RBNZ will be keeping tabs on key medium-term inflationary drivers … for signs of economic overheating. In our view this looks some way off and the RBNZ can rest easy for now.’
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Awaits UK Data
There is still some key UK data due for publication before the end of the week, which could cause a late-week shift in the Pound to New Zealand Dollar exchange rate.
The Confederation of British Industry (CBI) will publish its latest UK retail stats tomorrow, with the Office for National Statistics (ONS) publishing official retail stats on Friday.
Markit will publish its April PMI projections for the UK on Friday as well, which could give investors a better idea over how the UK economy is weathering the coronavirus pandemic this month.
The New Zealand Dollar could weaken in the coming days if market sentiment is dampened by rising coronavirus cases. This could make further GBP/NZD gains easier.
On the other hand though, underwhelming UK data and continued optimism around the New Zealand outlook could keep the Pound New Zealand Dollar (GBP/NZD) exchange rate outlook under pressure.