GBP/NZD Exchange rate Gains despite Abysmal UK GDP Figures
The Pound New Zealand Dollar (GBP/NZD) exchange rate opens this session on solid footing as broad weakness in NZD helps to offset a disappointing UK GDP report.
At the time of writing the GBP/NZD exchange rate is up nearly 0.4% today, leaving the pairing trading at around NZ$1.9175.
Pound (GBP) Dented by Disappointing GDP
While the Pound (GBP) is currently up against the New Zealand Dollar (NZD), Sterling faces pressure in broader trade this morning, following the release of some lacklustre UK GDP figures.
According to data published by the Office for National Statistics (ONS) UK growth shrank by 0.4% in April, having previously contracted 0.1% in March.
This was the lowest pace of growth in three years, with the slowdown appearing to show some of the underlying weakness in the UK economy after growth in the first quarter was artificially buoyed by Brexit stockpiling.
Analysts warn that the UK could even face a contraction in growth in the second quarter as Brexit uncertainty continues to drag on the economy.
Yael Selfin, Chief Economist at KPMG UK suggests:
‘The hangover that’s followed the UK’s original exit date is proving stronger than anticipated. Today’s figures signal the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.’
New Zealand Dollar (NZD) Dented by USD Rally
Meanwhile, preventing the New Zealand Dollar (NZD) from taking advantage of the Pound’s weakness this morning is the slump in market risk appetite at the start of the week.
This comes amid a rally in the US Dollar (USD) as markets welcome Donald Trump’s decision not to press ahead with tariffs on Mexico.
Further dragging on market risk appetite was the release of China’s latest trade figures, which revealed a sharp drop in imports last month and limited the appeal of trade driven currencies like the ‘Kiwi’.
GBP/NZD Exchange Rate Forecast: Slowing UK Wage Growth to Dent Sterling?
Looking ahead, the Pound New Zealand Dollar (GBP/NZD) exchange rate may find itself forced to give ground on Tuesday, following the release of the UK’s latest employment figures.
While the UK’s unemployment rate is expected to have held at a 44-year low in April, Sterling is likely to face some pressure as economists forecast that wage growth will have fallen to a 10-month low over the same period.
Meanwhile, in the absence of any notable domestic data this week the ‘Kiwi’ will be left vulnerable to market risk sentiment, likely facing some pressure if the US Dollar continues to rally.