GBP/NZD Conversion Rate Softens after UK Inflation Remains Low
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined by around -0.3% on Tuesday afternoon.
Although November’s British Consumer Price data met with estimates on the year and bettered predictions on a monthly basis, the Pound failed to capitalise. This is mainly due to the fact that inflation still remains very close to negative territory and has done so for a considerable period. Many analysts predict that UK inflation will return to negative territory in December given the recent huge drop in oil prices to a fresh 11-year low. Ben Brettell, senior economist at broker Hargreaves Lansdown, said that while core inflation – which strips out volatile components such as food and energy – had risen slightly, it ‘remained weak at 1.2%.’
‘This offers little suggestion that underlying inflationary pressures are building in the UK economy. Furthermore there are signs that wage growth is flattening out – figures due out tomorrow are expected to show pay growth has slowed from 3.0% to 2.5%.’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.2299.
NZD/GBP Conversion Rate Predicted to Advance despite Weak Chinese Stock Values
Despite the fact that the Shanghai Composite Index ended the Asian session lower, which weighed on demand for commodities, the New Zealand Dollar advanced versus many of its peers. This is partly the result of the People’s Bank of China (PBoC) cutting the Yuan reference rate, but mostly in response to improving dairy prices following the latest Global Dairy Trade Auction.
According to Nathan Penny Rural Economist with ASB bank, New Zealand production so far this season has been confirmed as weak and the outlook is for further weakness. ‘We see the current prices as out of whack with dairy fundamentals. We do note that the market is factoring in some milk powder scarceness later in the season – prices of later-dated WMP contracts are around $300/MT higher than near-dated ones. While we agree with that pattern, the overall price level is still too low,’ he said.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate dropped to a low of 2.2196 during Tuesday’s European session.
Pound Sterling to New Zealand Dollar Forecast: Fed Interest Rate Decision in Focus
The Federal Open Market Committee (FOMC) interest rate decision tomorrow is very likely to provoke market volatility. This is especially true for the risk-correlated ‘Kiwi’ (NZD) with a Fed rate hike likely to dampen demand for high-yielding assets. The New Zealand Dollar is also likely to see changes in response to New Zealand’s third-quarter Current Account Deficit-GDP Ratio.
For those invested in the British Pound, Wednesday’s labour market data has the potential to stimulate GBP movement. Of particular significance will be earnings data given that Bank of England (BoE) policymakers have stated that the slow pace of wage acceleration is one of the main reasons to avoid tighter policy outlook.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate climbed to a high of 2.2424 during Tuesday’s European session.
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