Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Slumps as UK Manufacturers Cut Jobs
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped around -0.9% this morning. The pairing is currently trading at around NZ$1.9949.
At the start of the week data revealed UK manufacturing downturn continued as both political and economic uncertainty weighed on the sector.
The UK’s manufacturing PMI slipped to 48.9 in November, from 49.8 in October. However, this was above last month’s flash estimate of 48.3.
Markit revealed that thanks to tougher conditions both at home and abroad, new orders slumped for the seventh consecutive month.
Added to this, manufacturing employment fell for the eighth month in a row, and the pace of job losses plummeted at the steepest rate since September 2012.
Commenting on today’s data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘A heavy sense of inevitability hung around the sector in November as it continued to suffer the effects of a lethal cocktail of Brexit uncertainty, slowing global growth and an impending General Election. These combined to stifle any chance of manufacturing crawling out of the contraction zone, where the sector was stuck for a seventh month in a row.
‘With this backdrop of pressures, the sector’s performance is unlikely to change any time soon, which means a bleak beginning for the industry in 2020.’
US-China Trade Optimism Buoys New Zealand Dollar (NZD)
The New Zealand Dollar rallied on Monday morning thanks to renewed US-China trade optimism and Chinese manufacturing data.
Despite last week’s decision by President Donald Trump to formally back anti-government protests in Hong Kong, markets were generally upbeat.
Investors stuck with the broader view that further escalation between the US and China can be avoided, buoying risk appetite.
Chinese data provided the ‘Kiwi’ with an upswing of support as it showed manufacturing saw the fastest expansion since December 2016.
Commenting on this, chief investment officer at Swiss wealth manager Prime Partners, Francois Savary said:
‘What we had in China on the weekend with the two PMIs being above expectation is clearly a good sign in terms of making the global stabilization scenario more credible.
‘Not only do we have signs of economic stabilization, we also have a decreased risk of deflation. I am not sure if that means markets should be hitting record highs, a lot of positive news has been priced in.’
Pound New Zealand Dollar Outlook: Will UK Construction Weigh on GBP?
Looking ahead to Tuesday, the Pound (GBP) could slide further against the New Zealand Dollar (NZD) following the release of November’s final construction PMI.
If construction remains firmly in contraction, weakened further by Brexit and election uncertainty, it is likely Sterling sentiment will slump.
Meanwhile, the ‘Kiwi’ could benefit from a further upswing of US-China trade optimism.
If reports reveal Washington and Beijing are closer to a ‘phase one’ trade deal, it could buoy risk appetite, and cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to fall.
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