Risk of GBP/NZD Exchange Rate Losses on Slower UK Inflation Rate
Despite this GBP-boosting news, however, there could be losses in the near-future if the UK’s inflation rate data disappoints.
September’s figures are tipped to show a slower pace of price growth on the month and the year, which could trigger GBP/NZD exchange rate losses.
Slower inflation might reduce GBP trader confidence, as could mean that a Bank of England (BoE) interest rate hike in 2019 is less likely.
Among other issues caused by falling inflation is reduced pressure on BoE policymakers to act, especially if it falls below the BoE’s 2% target range.
Will UK Retail Sales Growth Trigger GBP/NZD Exchange Rate Rise?
While Wednesday’s UK inflation rate data might weaken the Pound, the GBP/NZD exchange rate could recover if Thursday’s UK retail sales stats print positively.
Covering reported activity in September, the year-on-year readings are expected to show growth with and without fuel sales included.
Continued retail sales growth is a requirement for a strong services PMI reading, so the Pound could rise against the New Zealand Dollar on such positive news.
New Zealand Dollar to Pound Exchange Rate Outlook: Will NZD/GBP Drop on Dairy Price Data?
For New Zealand Dollar (NZD) traders, the next economic data to watch out for will come this afternoon when the Global Dairy Trade price index is released.
This reading shows any changes to global dairy prices and is expected to reveal a -1.7% drop in dairy prices at the latest session.
This would go off the back of a -1.9% drop at the last session, so the New Zealand Dollar could fall sharply on such news.
Falling dairy prices are negative news for New Zealand, as they mean worsening conditions in the nationally-important dairy industry.
If prices drop by as much as or more than forecast then the New Zealand Dollar could fall further against the Pound this afternoon.
Hints for Fed Interest Rate Hike could Cause NZD/GBP Exchange Rate Losses
This week’s other economic news might cause additional New Zealand Dollar (NZD) losses, with Wednesday’s Federal Reserve minutes risking NZD exchange rate losses.
The Fed minutes are out on Wednesday evening and might indicate that another US interest rate hike is coming in November or December this year.
A fourth Fed rate hike in 2018 has been expected for months now, but official confirmation could still boost the US Dollar and weaken the New Zealand Dollar.
A stronger US Dollar reduces the appeal of risk-based currencies like the NZD, as currency traders turn to the comparatively stable USD.