Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises despite UK Manufacturing Falling to Two-Month Low
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged up, and the pairing is currently trading at around NZ$1.9630.
On Wednesday data revealed that the UK manufacturing upturn slowed as the pace of stockpiling eased and new export business declined.
The UK manufacturing PMI slipped from March’s 13-month high of 55.1 to a two-month low of 53.1 in April.
Commenting on this, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘As Brexit prevarication continued, overseas clients took to action and found new supply chain routes away from the UK resulting in the second-fastest drop in new export orders in four-and-a-half years.
‘Some small respite this month came in the form of a marginal ease in input price inflation but the ruthless realities of a weak global economy and the dragging effects of political indecision has the sector merely surviving from one month to the next in the hope of something better soon.’
New Zealand Dollar (NZD) Slips despite NZ Unemployment Close to Decade Low
Data released at the start of Wednesday’s session revealed that the New Zealand unemployment rate edged down in the first quarter of 2019.
Unemployment slipped from 4.3% to 4.2%, close to a ten-year low.
However, sluggish wage growth and the fall in employment change suggested a softer growth outlook which weighed on the ‘Kiwi’.
The dip in unemployment seemed to be due to fewer people participating in the workforce, as the participation rate edged down to 70.4% from 70.9%.
The fall in employment rate is said to reflect a decrease in the number of people employed and an increase in the working-age population.
Commenting on this, Jason Attewell, Labour Market and Household Statistics Senior Manager at Statistics New Zealand said:
‘New Zealand has seen a softening of economic growth as measured by gross domestic product over the last six months, and we now are seeing that softening come through the employment rate.’
‘Productive’ US-China Trade Talks do Little to Buoy New Zealand Dollar (NZD)
Meanwhile, on Wednesday morning US Trade Secretary Steven Mnuchin called the latest round of trade talks ‘productive’.
In a Tweet, Mnuchin wrote:
‘Ambassador Lighthizer and I just concluded productive meetings with China’s Vice Premier Liu He. We will continue our talks in Washington, D.C next week.’
While there are no reports of a breakthrough in discussions, further meetings are planned in the US next week.
However, this could do little to buoy the risk-sensitive New Zealand Dollar against Sterling.
Pound New Zealand Dollar Outlook: Will the GBP/NZD Exchange Rate Fall on a Dovish BoE?
During the start of Thursday’s Asian session, the New Zealand Dollar (NZD) could fall against the Pound (GBP) following the release of the New Zealand building permits.
If the number of permits for new construction projects decreases further than forecast, sentiment in the ‘Kiwi’ could slide.
Later in the day the Bank of England (BoE) is due to release its interest rate decision and monetary policy meeting minutes which could cause Sterling to fall.
If the tone of the central bank is overly dovish and the monetary policy minutes suggest the bank may cut interest rates in the future, the Pound New Zealand Dollar (GBP/NZD) exchange rate may fall.