Fastest Rate of Manufacturing Job Cuts in a Decade Leaves Pound New Zealand Dollar Currency Rate Muted
The Pound New Zealand Dollar (GBP/NZD) exchange rate was left flat today, with the pairing currently trading at around NZ$2.0175.
On Friday, data revealed that Brexit uncertainty and gloomy predictions for the UK economy continue to weigh on the UK manufacturing sector, leaving the sector’s PMI in contraction territory for the second successive month.
However, the data was collected before the UK accepted a Brexit ‘flextension’ from the EU and came before a December general election was announced.
Commenting on this morning’s data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘A minor uplift in overall purchasing activity did little to ease the agony for manufacturing companies in October as the sector remained submerged in contraction territory and heading for a recession. Business was still restrained by the Brexit leash, as firms were subjected to the struggle against client indecision and also the down pull of a slowing global economy.
‘Naturally this had a heavy impact on job creation as manufacturing firms cut jobs for the seventh month in a row and at one of the fastest rates for a decade. Companies have lost faith in their ability to weather the ongoing storms, reining back spending where they can. As the manufacturing sector remains in the twilight zone, wondering whether to stock or de-stock, hire new staff, look for business or batten the hatches once again, it looks like a scary end to the year.’
New Zealand Dollar (NZD) Muted as Beijing Refuses to Budge on ‘Thorniest Issues’
The risk-sensitive New Zealand Dollar was left under pressure today as risk appetite was left dented by a Bloomberg report.
The report said that Chinese officials were having doubts about being able to secure a comprehensive long-term trade agreement with the US to end the trade war.
Added to this, the report warned that Beijing will not budge on the ‘thorniest issues’ and are concerned about the ‘impulsive nature’ of the US President.
Risk appetite slumped despite US President Donald Trump announcing that a new site for himself and his Chinese counterpart to sign a ‘Phase One’ deal will soon be revealed.
The US President wrote on Twitter:
‘China and the USA are working on selecting a new site for signing of Phase One of Trade Agreement. The new location will be announced soon. President Xi and President Trump will do signing!’
However, Trump’s announcement did little to offset investor concerns raised by the Bloomberg report on Thursday.
Pound New Zealand Dollar Outlook: Will US-China Progress Buoy NZD?
Looking ahead to the start of next week, the Pound (GBP) is likely to slide against NZD following the release of October’s UK construction PMI.
If Markit reveals the British construction sector continues to contract thanks to Brexit pessimism, it is likely Sterling will slump.
Meanwhile, the ‘Kiwi’ is likely to react to any developments in the US-China trade war. If the US and China announce a date for the two leaders to sign the ‘Phase One’ agreement, it could cause risk appetite to rise, and send the Pound New Zealand Dollar (GBP/NZD) exchange rate lower.