GBP/NZD Exchange Rate Sinks as NZD GDT Figures Improve
The Pound New Zealand Dollar (GBP/NZD) exchange rate fell by -0.3% today, leaving the pairing trading around NZ$1.845.
The New Zealand Dollar (NZD) rose against the Pound (GBP) following yesterday’s printing of the NZ Global Dairy Trade price index figures.
These rose above forecasts from -0.4% to 2.7% – ending two months of falling.
Anne Boniface, a Senior Economist at Westpac Bank, was optimistic, saying:
‘One crucial development we will be keeping a close eye on is how Chinese demand evolves in the coming months. Demand for dairy products in China seems to be holding up well, despite growing headwinds for the Chinese economy and trade tensions.’
As China is New Zealand’s closest trading partner this bodes well for the NZ economy, further buoying market confidence in the ‘Kiwi’.
The Pound, meanwhile, has continued to struggle following comments from both Tory leadership candidates, Boris Johnson and Jeremy Hunt, who appeared to harden their position on Brexit by saying they would abandon the Northern Irish backstops in talks with the EU.
However, as the EU seems unwilling to reopen negotiations on the condition, this caused Sterling traders to become skittish.
GBP/NZD Exchange Rate Falls as London Houses Prices Fall at Fasted Rate in a Decade
Sterling failed to gain on the ‘Kiwi’ following today’s publication of the UK inflation data for June.
These confirmed forecasts and held steady at 2%.
Mike Hardie, the Head of Inflation at the Office for National Statistics, commented:
‘The overall rate of inflation remains steady, with no change in pace this month. Petrol and diesel prices fell this year but rose a year ago, while clothes prices dropped by less than this time last year.’
Today’s year-on-year PPI input figures for June meanwhile fell below forecasts from 1.4% to -0.3%.
Pound traders have also remained increasingly cautious as London house prices suffered their biggest slump since 2009 amid heightened Brexit uncertainty.
Richard Donnell, a Research Director at Zoopla, commented:
‘Annual price falls in London are acting as a drag on the headline rate of UK house price growth, but after three years of price falls in London there are signs that the coverage of price falls is starting to narrow, especially looking at growth over the last three months.’
GBP/NZD Outlook: UK Retail Sales Figures in Focus
Sterling traders will be looking ahead to the UK’s retail sales figures for June tomorrow.
However, are these are expected to continue to ease, we could see the GBP/NZD exchange rate begin to sink further.
New Zealand Dollar investors, meanwhile, will be paying close attention to US-China trade developments.
As New Zealand relies heavily on Chinese trade, any indications that the two superpowers can secure a potential deal would prove NZD-positive.
The GBP/NZD exchange rate will, however, remain sensitive over Brexit developments as the two Tory leadership candidates show increasing signs of taking a hard-Brexit stance.
If Boris Johnson or Jeremy Hunt continues to neglect the Norther Irish backstop condition, we could see the Pound begin to fall on increased Brexit jitters.
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