GBP/NZD Exchange Rate Edges Higher as Car Production Boosts UK GDP
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose today and is currently trading around $1.8909 on the interbank market.
The Pound rose following the publication of the UK GDP figures for May this morning, which confirmed consensus and rose by 0.3% from -0.4%.
Rob Kent-Smith, the Head of GDP at the Office for National Statistics (ONS), said:
‘GDP grew moderately in the latest three months, with IT, communications and retail showing strength… The economy returned to growth in the month of May, following the fall seen in April. This was mainly due to the partial recovery in car production.’
UK manufacturing production figures for May failed to meet their consensus 2.1% increase, however, and rose by 1.4% against -4.2%.
James Smith, a Developing Market Economist at ING, said:
‘[N]ew orders have slumped as firms grapple with what to do with the stockpiles they built up during the first quarter, in anticipation of a possible ‘no deal’ Brexit.’
Brexit concerns have however held back some of Sterling’s gains today.
Last night saw Boris Johnson, the current Tory leadership favourite, once again reiterate his unwillingness to take a no-deal Brexit off the table.
GBP/NZD Exchange Rate Gains as Chinese Economic Data Leaves NZ Markets Jittery
The New Zealand Dollar (NZD) fell against the Pound (GBP) following last night’s printing of the NZ food price index figure June.
These fell below the consensus decrease of -0.3% to a further -0.7%.
With few notable New Zealand economic data releases so far this week, today’s Chinese data left some ‘Kiwi’ traders feeling cautious.
As China is New Zealand’s closest trading partner, the decrease in the yearly Chinese PPI figures for June to 0.0% – despite the forecast 0.3% improvement – dented NZ market confidence.
Chinese inflation, meanwhile, stabilised this morning.
A note from Capital Economics was cautious, however, saying:
‘Looking ahead, the latest stabilisation in consumer price inflation is likely to prove short-lived. The drag from falling oil prices should ease before long and the recent collapse in pig supply suggests that upward pressure on food prices is likely to intensify in the coming months.’
GBP/NZD Forecast: Sterling Could Fall on Downbeat Financial Stability Report
New Zealand Dollar traders will be awaiting this evening’s NZ year-on-year credit card spending figures for May.
Any signs of improvement would prove New Zealand Dollar-positive.
NZ electronic card retail sales for June are also expected to improve.
Sterling traders, meanwhile, will be looking ahead to tomorrow’s financial stability report from the Bank of England.
The GBP/NZD exchange rate could likely sink if this confirms expectations of an easing UK economy.