Pound to New Zealand Dollar Exchange Rate Higher amid Weak New Zealand Data
Brexit jitters and a lack of solid UK data means the Pound (GBP) has been unappealing this week, but the Pound to New Zealand Dollar (GBP/NZD) exchange rate is still on track to sustain gains due to weakness in the New Zealand Dollar (NZD) outlook.
Last week saw GBP/NZD slip slightly, from the level of 1.9360 to 1.9326, due to the week’s Brexit chaos combined with some higher demand for risky currencies like the ‘Kiwi’.
However, this week so far GBP/NZD has regained all those losses and gained higher, trending closer to the level of 1.9412 at the time of writing.
With markets closed to observe bank holidays tomorrow, the pair may be on track to sustain much of these gains.
Despite lingering uncertainties over a lack of Brexit clarity, as well as higher market demand for risky trade-correlated currencies, the Pound to New Zealand Dollar exchange rate is gaining.
This is due to considerable New Zealand Dollar bearishness, but the latest UK retail sales stats bolstered the Pound as well.
Pound (GBP) Exchange Rates Supported by Surprisingly Strong UK Retail Results
After days of mixed movement on Brexit uncertainties, being driven largely by movement in its rivals, the Pound saw a stronger boost in demand today as the latest UK data showed resilience in Britain’s economic activity.
Despite market concerns that Brexit uncertainty would dominate economic activity for the next half a year, March’s retail sales results printed well above expectations today.
Retail sales jumped from 0.4% to a solid 1.1% month-on-month rather than contracting at -0.3% as expected, while the yearly figure unexpectedly surged from 4.0% to an impressive 6.7%.
The data indicated that despite Brexit uncertainties, consumers continued to shop undeterred, providing important support for Britain’s services sector and the economy as a whole.
According to the Office for National Statistics (ONS), who compiles the report, the warmer weather this year is playing a part in supporting consumer activity.
New Zealand Dollar (NZD) Exchange Rates Remain Highly Unappealing since Poor Inflation
The New Zealand Dollar continues to be one of the market’s most unappealing major currencies this week, as factors keep piling against it.
Investors were already betting that the Reserve Bank of New Zealand (RBNZ) was going to cut New Zealand interest rates fairly soon, but this week’s data has only made markets even more confident that the bank will become more dovish.
Wednesday’s Asian session saw the publication of New Zealand’s Q1 Consumer Price Index (CPI) inflation rate report, which fell short of expectations in both major prints.
The figure fell to just 1.5% year-on-year, and the quarterly inflation rate remained at a near-stagnant 0.1% rather than climbing to the expected 0.3%.
These factors already weighed on the New Zealand Dollar, but this morning’s stronger than expected Australian job market data only weakened the ‘Kiwi’ further as investors bought rivals like the Australian Dollar (AUD).
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Hope for Signs of Strength in New Zealand Trade
With markets closed in many regions from Friday to Monday to observe bank holidays, Pound to New Zealand Dollar (GBP/NZD) exchange rate movement will likely continue on its current trajectory for the coming sessions – unless there are surprising political developments.
Any unexpected Brexit developments over the coming days would cause a shift in Pound movement. For example, the Pound outlook would weaken if talks between the UK government and opposition Labour Party fall through.
As for the New Zealand Dollar, shifts in risk-sentiment could cause movement in the currency. However, amid Reserve Bank of New Zealand (RBNZ) interest rate hike bets, NZD is less likely to benefit from risk-on movement than other relatively risky currencies.
In terms of data, next week will be fairly quiet too. However, any surprisingly strong of weak prints could definitely cause some movement if there is a lack of notable political news.
UK public borrowing data will be published on Wednesday, followed by CBI’s UK business optimism and factory stats on Thursday. New Zealand trade balance data will come in on Friday.
If New Zealand trade is perceived as stronger than expected, concerns about global trade tensions impacting New Zealand’s economy could lighten and the Pound to New Zealand Dollar (GBP/NZD) exchange rate outlook could fall.