GBP/NZD Conversion Rate Holding Downtrend Today as Chinese Stocks Extend Rally
Sentiment towards the ‘Kiwi’ (NZD) has remained positive on Friday morning, as the Chinese stock markets remain in bullish territory. With the Pound (GBP) still subdued following yesterday’s more dovish than expected Bank of England (BoE) Inflation Report the GBP/NZD exchange rate is in a persistent slump around 2.2949.
Earlier…
Following an unexpectedly dovish Inflation Report from the Bank of England (BoE) the GBP/NZD exchange rate has entered a sharp slump today.
New Zealand Dollar Currency News: Increased Domestic Unemployment Rate and Dairy Price Prompted Slump
Things were not especially positive for the New Zealand Dollar (NZD) on Wednesday, following a slight rise in the domestic Unemployment Rate alongside another slide in dairy prices. This was the second consecutive GlobalDairyTrade auction at which the value of milk solids declined, suggesting that the underlying weakness of the dairy industry continues to weigh on the commodity. Naturally these results prompted a fresh round of bearishness for the ‘Kiwi’, allowing the GBP/NZD exchange rate to make substantial gains throughout the day.
The Pound (GBP) was inspired to strengthen further on the back of the latest UK Services PMI, which clocked in above forecast to rise from 53.5 to 54.9. Given that the single largest portion of the nation’s GDP is contributed by the service sector this offered significant encouragement to traders, who were hopeful that the positive data would spur the Bank of England (BoE) to take a more hawkish tone at its upcoming policy meeting.
Bank of England (BoE) Inflation Report Unexpectedly Dovish to Push GBP/NZD Conversion Rate down from Monthly Best
Overnight the ‘Kiwi’ saw a dramatic increase in demand, despite some strong US data having encouraged bets of a December interest rate hike from the Fed. Risk demand was triggered by Chinese stocks extending recent gains as the Shanghai Composite closed up 1.9% and commodity prices consequently rallied. This prevented the GBP/NZD exchange rate from rising past a monthly best of 2.3382, as sentiment towards the Pound became rather more cautious ahead of today’s BoE policy meeting.
Although investors were not overly surprised that the Monetary Policy Committee (MPC) voted 8-1 to leave interest rates unchanged today the particularly dovish tone of the central bank’s Inflation Report was an unexpected blow to confidence. Suggesting that policymakers were in no rush to raise rates in the imminent future as the quarterly outlook was revised down, this more cautious assessment saw the Pound slump substantially across the board. Consequently the GBP/NZD pairing plunged to a daily low of 2.2931.
GBP/NZD Exchange Rate Forecast: US Change In Non-Farm Payrolls Predicted to Provoke ‘Kiwi’ Volatility
While there will be no other New Zealand data released ahead of the weekend, the ‘Kiwi’ could extend its current gains if the US Change in Non-Farm Payrolls figure prints disappointingly. Should the report lend support to the chances of the Fed opting to move on interest rates in December, however, the GBP/NZD exchange rate could regain some lost ground.
Following the dovishness of today’s announcement Sterling is likely to remain relatively softened, although if the UK’s Visible Trade Balance shows a further narrowing of the domestic trade deficit then traders could have some incentive to return to the weakened currency.
Current GBP, NZD Exchange Rates
At time of writing, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was in a strong downtrend at 2.2989, while the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing remained on bullish form in the region of 0.4346.
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