- Pound Sterling New Zealand Dollar Hits 1.7637 – New Zealand Dollar Pound Sterling Hits 0.5665
- New Zealand Credit Card Spending Mixed in July – ‘Kiwi’ Encumbered
- UK Public Finance Reaches Surplus – Fails to Bolster Sterling
The Pound to New Zealand Dollar exchange rate fluctuated today, with both the UK and New Zealand publishing data releases that failed to support their respective currencies.
New Zealand’s credit card spending figures were somewhat mixed in July, with the month-on-month figure printing at 0.9%, up from June’s 0.2%, and the year-on-year figure demonstrating a significant drop from 8.3% to 7.2%.
News that New Zealanders had been heading to the shops a lot in July did not, however, do a great deal for the ‘Kiwi’ Dollar, which remains encumbered by the diminished likelihood of a rate hike.
UK Public Finances Reach Surplus, Pound (GBP) Fails to Capitalise
The UK’s public sector demonstrated a net borrowing surplus of £0.76bn in July, a significant jump over the previous year-on-year figure of £0.27bn and above market expectations of £0.2bn.
Excluding banks, the public sector net borrowing surplus hit £0.2bn – the first July surplus since 2002.
Whilst these figures seemed positive, markets were quick to read between the lines to discover that the borrowing figures were heavily reliant on tax receipts, something that many economists regard as likely to significantly slow at the end of the fiscal year.
Samuel Tombs, an economist at Pantheon Macroeconomics UK stated:
‘Growth in receipts will slow sharply at the end of this fiscal year, because the bumper batch of SA receipts collected in January and February 2017, due to prior tax changes, will not be repeated.
The Office for Budget Responsibility (OBR) also [will] likely revise down its very optimistic forecasts for wage growth in the Autumn Budget, boosting the borrowing forecast in future years. As such, we continue to doubt that the Chancellor will pare back the fiscal consolidation planned for the coming years’.
New Zealand Trade Balance Ahead, ‘Kiwi’ (NZD) Liable to Come under Pressure
New Zealand’s trade balance figures for July are due tomorrow, with a significant drop into deficit forecast.
The overall trade balance figure is expected to fall from N$242m to N$-200m, a plunge that would mark the end of a four month run of surplus prints (should it occur).
The consensus regarding the import figure for July is that it will increase from N$4455m to N$4600m, whilst the export figure is predicted to drop from N$4697m to N$4420.
If these figures do indeed disappoint then the Pound could capitalise, pushing the GBP NZD exchange rate out of its current lull.
Significant GBP Volatility Forecast on Thursday’s UK GDP Figures
Markets are currently hesitant to buy into the Pound before Thursday’s significant UK GDP figures are revealed.
Thursday’s 2nd estimate Q2 gross domestic product figures are currently expected to remain steady year-on-year at 1.7% and quarter-on-quarter at 0.3%, though a slight deviation in either direction could cause extreme volatility for GBP NZD.
If they remain steady, as forecast, then it could indicate that the UK’s economy is perhaps, more robust than previously thought, something that could well buffer the Pound against further gloomy sentiment.
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