Global markets have been subject to strange movement on Wednesday, which could be as a result of trader risk aversion strategies. Sterling is generally declining against the majority of its most traded currency competitors, although the exact reason for this is difficult to pinpoint. Despite a complete absence of domestic data and less-than-ideal Chinese data, the New Zealand Dollar has made a fractional gain against the Pound.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0546.
A mixed set of data results on Tuesday saw Sterling generally decline against high-yielding currencies. Whilst both manufacturing and industrial production advanced on a yearly basis, the monthly readings showed growth in both areas to have cooled in August.
Additionally, the NIESR Gross Domestic Product estimate showed declination from 0.8% to 0.7%. Although the previous figure was revised upwards, the decline still indicated a slowing in growth and weighed on sentiment towards the Pound.
An absence of New Zealand data on Tuesday saw the ‘Kiwi’ (NZD) Dollar generally decline against the majority of its currency peers.
The Pound Sterling to New Zealand Dollar exchange rate has hit a low today of 2.0535.
Wednesday’s British data has printed relatively positively. According to Halifax, in the three months to September house prices were up 9.6% on the year – down only slightly from the 9.7% growth recorded in the three months to August. On a month-on-month basis house prices were up 0.6% in September following stagnation in August.
However, the British Retail Consortium (BRC) Shop Price Index showed a yearly decline in September from -1.6% to -1.8%, evidence of shop prices falling further.
There are several factors which would support a ‘Kiwi’ downtrend on Wednesday which makes it all the more strange that it is currently holding its own against the Pound.
Trader risk sentiment has taken a negative turn after the International Monetary Fund indicated that global growth had slowed, with the institution asserting that the pace of recovery is uneven and country-specific.
Two underlying forces weigh on global recovery, according to Oliver Blanchard, Economic Counsellor and head of the IMF’s Research Department. ‘In advanced economies, the legacies of the precrisis boom and the subsequent recession, notably high debt burdens and unemployment, still cast a shadow on the recovery, and low potential growth ahead is a concern’.
Chinese data has printed less-than-ideally on Wednesday. The Chinese Composite PMI declined from 52.8 to 52.3 and the Services PMI diminished from 54.1 to 53.5.
Forecast for the Pound to New Zealand Dollar Exchange Rate
On Wednesday evening New Zealand’s Card Spending data will be published. It has the potential to provoke ‘Kiwi’ volatility.
Thursday’s British data will be of high importance for those invested in Sterling. The Bank of England Asset Purchase Target and Rate Decision are unlikely to spark Sterling movement given that no alterations to fiscal policy are expected. That being said, any commentary from central bank officials could have an impact on the Pound.
The pound Sterling to New Zealand Dollar exchange rate has reached a high today of 2.0628.
UPDATE
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0362.
Although there is a complete absence of New Zealand domestic data on Thursday the ‘Kiwi’ (NZD) has strengthened against the Pound.
This can be attributed to a softer US Dollar following the release of the Federal Reserve minutes from their latest policy meeting. The dovish minutes outlined concerns over the strength of the US Dollar and the weakness of foreign economic growth.
The New Zealand Dollar has benefitted from the US Dollar decline as traders flock to risk-sensitive currencies.
Sterling has declined against the majority of its major rivals after a solitary British data publication declined beyond the market consensus.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound,
,US Dollar,1.6085,
Pound,,Euro,1.2701,
Pound,,New Zealand Dollar,2.0529,
Pound,,Australian Dollar,1.8284,
US Dollar,,Pound,0.6217,
New Zealand Dollar,,Pound,0.4860,
Euro,,Pound,0.7872,
Australian Dollar,,Pound,0.5469,
[/table]
