Pound New Zealand Dollar Exchange Rate Climbs despite Pound’s Weakness
Investors have been selling the Pound (GBP) in recent sessions, but broad New Zealand Dollar (NZD) weakness is helping the Pound New Zealand Dollar (GBP/NZD) exchange rate to trend near its best levels in months.
The New Zealand Dollar was strong enough last week to push GBP/NZD lower from 1.9400 to 1.9353, but its strength has largely evaporated this week.
GBP/NZD has surged this week, recovering losses and extending highs. At the time of writing on Wednesday afternoon, GBP/NZD is trending near a 4-month best level of 1.96923.
Investors are now awaiting UK retail sales results due on Friday.
Pound (GBP) Exchange Rates Supported by PMIs despite Slower Inflation
Investors have been buying the Pound against a weak New Zealand Dollar, despite the Pound’s losses against other major currencies.
Today’s UK inflation rate report showed inflation slowing considerably. It dampened speculation that the Bank of England (BoE) could become more hawkish any time soon.
However, today’s UK PMI projections came in notably above forecasts. This helped the Pound to hold its ground against weaker rivals like the ‘Kiwi’.
New Zealand Dollar (NZD) Exchange Rates Slump as Rate Hike Speculation Doused
The New Zealand Dollar has been appealing for months, as coronavirus pandemic recovery hopes boosted market sentiment and speculation of tighter monetary policy from central banks.
However, this week’s events have poured cold water on Reserve Bank of New Zealand (RBNZ) interest rate hike speculation.
New Zealand has taken action to cool New Zealand’s overheated housing market, and analysts believe it will dampen the chances of more hawkish policy from the RBNZ any time soon.
According to Analysts at MUFG:
‘The New Zealand Dollar has been undermined both by more risk averse trading conditions and the scaling back of RBNZ rate hike expectations. The trigger for the sharp correction lower in short-term yields was the announcement from the New Zealand government that it has taken action to dampen activity in the housing market.’
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Outlook Could be Hit by Poor UK Data
The Pound to New Zealand Dollar exchange rate has seen strong performance this week so far, largely on the back of New Zealand Dollar losses.
If the New Zealand Dollar strengthens again, GBP/NZD could quickly give up ground.
The Pound could be especially likely to give up gains if upcoming UK data disappoints investors. UK retail sales results from February are due on Friday, and will give investors a better idea of how Britain’s consumer activity has been amid the third coronavirus lockdown.
If UK retail is better than expected, GBP/NZD is more likely to sustain gains. However, weaker retail stats could cause fresh weakness in Sterling instead.
Amid a lack of upcoming New Zealand data, the Pound New Zealand Dollar (GBP/NZD) exchange rate will focus on shifts in market sentiment and UK data in the coming sessions.