Despite a gradual slide on Wednesday, strong employment data and hawkish comments from Mark Carney, Bank of England (BoE) Governor, on Thursday saw the GBP/NZD exchange rate trending up on Friday after positive jobs data. Meanwhile, weak economic data from China weighed on demand for NZD although the likelihood that economic stimulus would be required from the People’s Bank of China (PBOC) is keeping the ‘Kiwi’ dollar from a larger depreciation.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Buoyed by Positive Jobs Data and Hawkish Carney Comments
The BoE ‘Super Thursday’ announcements saw Sterling slump against the major currencies as a dovish outlook on inflation and the state of the global economy saw traders desert the British asset. Speaking just a week later, however, Governor Mark Carney was of the opinion that the UK economy was sufficiently strong to weather global economic weakness, contradicting the BoE’s fears that external factors would continue to weigh down inflation.
His surprisingly hawkish comments, combined with some good results from the UK labour market, saw the GBP/EUR exchange rate regain some of the ground it had lost the week before. While unemployment fell slightly and the number of new jobs created was significantly higher than forecast at 177k, third quarter Average Weekly Earnings failed to increase by more than the same 3.0% rate as the previous period, snubbing the forecast rise of 3.2%. The data sends mixed signals but after a week of very little UK data, the figures were enough to strengthen Pound Sterling and give traders some confidence in the British asset.
The GBP/NZD exchange rate ended the week trending up 0.5%.
NZD/GBP Exchange Rate Down: Investors Fail to Share Growing Consumer Confidence in New Zealand Economy as China Releases Poor Data
New Zealand Consumer Confidence was up, with the index printing up 6.8% at 122.7. Businesses weren’t as confident, however, with the Business NZ Performance of Manufacturing Index for October showing a weaker anticipation of economic growth. Printing at 53.3, the index shows the market on the whole is still confident that the economy will expand, but a drop in belief suggests Chinese data was weighing on the minds of New Zealand business owners.
The NZD/GBP exchange rate was kept on the downtrend last week as key data from China, New Zealand’s main export partner, posted worse-than-forecast results. October’s Year-on-Year (YoY) exports shrank -6.9%, nearly double the rate of contraction in the previous month. The Consumer Price Index rose 1.3%, less than forecast, and YoY Industrial Production growth posted marginally lower.
Most crucially for New Zealand, Chinese YoY imports continued to contract at a significant pace, although the shrinkage reduced, to -18.8% rather than the forecast -15.2%.
The NZD/GBP exchange rate trended between 0.4281 and 0.4342 during Friday’s European session.
GBP/NZD Exchange Rate Forecast: New Zealand Reserve Bank Inflation Expectation and UK Consumer Price Index in Focus
There will be a steady stream of data next week which could affect demand for either Pound Sterling or the New Zealand Dollar. The New Zealand Performance Services Index for October and Retail Sales Excluding Inflation for Q3 releases may strengthen the ‘Kiwi’ if the results are positive.
The UK’s Rightmove House Prices data for October out Monday and Tuesday’s Consumer Price Index release have the potential to cement investor sentiment towards the economic outlook of either country. Wednesday sees little of interest, but Thursday and Friday promise enough to see significant movement in GBP/NZD.
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