Disappointing Retail Sales Weakened New Zealand Dollar (NZD), Lack of Further Yuan (CNY) Devaluation Erodes GBP/NZD Gains
New Zealand’s Retail Sales were not nearly as strong as had been hoped last night, falling short of forecast to demonstrate a distinct contraction. In response the GBP/NZD exchange rate entered a strong upwards trend, reaching a peak of 2.3941, before an increase in value for the Yuan (CNY) prompted a rally for the ‘Kiwi’ (NZD).
Earlier…
The New Zealand Dollar (NZD) continued to shed value as the Yuan (CNY) dipped further, with the GBP/NZD exchange rate beginning to recover some of its lost ground.
Chinese Devaluation Hit ‘Kiwi’ (NZD) Hard This Week to Boost the GBP/NZD Exchange Rate to a Fresh Five-Year High
Like its neighbours the ‘Kiwi’ (NZD) was significantly dragged down on Tuesday by the shock announcement that the People’s Bank of China (PBoC) was depreciating the Yuan (CNY) by nearly 2% against the US Dollar (USD). Following on from the economic slowdown that China is currently experiencing, the nation’s consequently decreased buying power has weighed heavily on the commodity currencies belonging to nations who depend upon Chinese custom. Fears that this might be the opening move in a currency war also spooked pundits, leading to the GBP/NZD exchange rate striking a five-year high of 2.3994 early on Wednesday
The Pound (GBP), however, was still caught under the dovish shadow of the disappointing result of last week’s Bank of England (BoE) Rate Decision. Additionally, yesterday’s UK employment data did not ultimately offer the rally that had been hoped for, as Employment Change showed an unimpressive decline to come in at a decrease of -63,000 instead of the -55,000 forecast. In response the GBP/NZD pairing retreated to 2.3550.
New Zealand’s Manufacturing PMI Falls Short on Top of More Yuan (CNY) Depreciation to Set GBP/NZD Pairing Back on Rise
Last night’s Manufacturing PMI for New Zealand proved to be equally frustrating as the number shrank from 55.1 in the previous month to 53.5, a bigger decrease than had been anticipated. However, it was the third consecutive day of Yuan devaluation, in spite of PBoC assurances, that had the bigger impact upon the strength of the ’Kiwi’. This week’s combined depreciation is the largest China has seen in more than two decades and the Yuan has continued to pull down a swath of other currencies with it.
With no other domestic data releases from the UK the GBP/NZD pairing is being predominantly driven by the faltering commodity currency today. Throughout the day the exchange rate has been steadily rising as the New Zealand Dollar softens, hitting a daily peak of 2.3774 as it starts to recoup some of yesterday’s losses.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast: Continued Pound Stagnation Probable, ‘Kiwi’ Stands to Decline Further
Later tonight the New Zealand Retail Sales data for the second quarter is expected to show modest declines. Any indications of the economy being in a better state than currently thought would probably push the ‘Kiwi’ a little higher, but any further developments in China will undoubtedly outweigh the impact of this report. The Yuan stands to remain the primary influence on the New Zealand Dollar.
On Friday the UK Construction Output seems unlikely to provide the Pound with any particular momentum, although perhaps a significantly impressive result could spur traders to return to the currency. The continuing turmoil amongst the Australasian and risk-sensitive currencies will also no doubt benefit Sterling more in the coming days, with the value of the GBP/NZD pairing likely continuing to climb.
Current GBP, NZD Exchange Rates
At time of writing the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is trading strongly in the range of 2.3769, while the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing remains in a downtrend at 0.4205.
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