The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending higher at the close of last week. The appreciation was as a result of the surging US Dollar bullying higher-yielding currencies into declination.
GBP/NZD Forecast to Advance on Monday
In the aftermath of disappointing data out of China, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate rallied by around 1.02%. The Pound Sterling, however, is subject to changes in foreign currency movement as traders await employment confidence data.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0400.
Imports and Exports data from the world’s second-largest economy softened dramatically in November. This caused risk-correlated and higher-yielding currencies to slump under the weight of trader anxieties regarding global economic disparity. Given its trade relationship with China, the ‘Kiwi’ softened significantly.
GBP/NZD Could Trend Higher on Tuesday
Once again, an absence of data pertaining to New Zealand will see the ‘Kiwi’ (NZD) fluctuate in response to movement in the foreign currency market. In addition, commodities are likely to play a significant role in ‘kiwi’ movement.
The Pound Sterling will appreciate on Tuesday if UK Industrial Production and Manufacturing Production show solid growth. Additionally, the NEISR Gross Domestic Product Estimate has the potential to influence Sterling movement.
GBP/NZD May Fluctuate on Wednesday
Wednesday will be significant for those invested in the New Zealand Dollar as the Reserve Bank of New Zealand is due to make its rate decision. Given that commodities are declining and the RBNZ has voiced concern regarding overvaluation, there is a possibility that the central bank will resort to unconventional methods in order to address sluggish growth. Even if the bank avoids stimulus measures, however, the following news conference with Governor Graeme Wheeler will be closely scrutinised for dovish language.
In the view of TD Securities; ‘We look for the MPS to discuss that tighter monetary policy has been more effective than anticipated in cooling activity, that falling terms of trade means the NZD remains “unsustainable and unjustified,” and that record migration puts more upward pressure on domestic demand. We look for a 25bps downgrade to the bank bill profile, implying stability for OCR, not cut’.
Earlier in the month it was asserted that the RBNZ could begin offering more of an insight into its decisions regarding borrowing costs by publishing interest rate forecasts.
In the opinion of Swedish fiscal policy expert Lars Svensson; ‘I think it’s a little more transparent to have a forecast for the Official Cash Rate, because that is the interest rate that the bank controls […] In their models they used the 90-day rate and continued to produce forecasts for that. They could easily switch to the OCR.’
British trade balance will be of interest to those invested in the Pound, especially given that the previous data indicated that the deficit widened. Visible Trade Balance, Trade Balance Non EU and Total Trade Balance all have the potential to provoke volatility.
GBP/NZD to Hold Steady on Thursday?
With very little by way of domestic data pertaining to both the UK and New Zealand due for publication on Thursday, GBP/NZD movement is unlikely to be significant. For those trading with the Pound, the RICS House Price Balance will be of interest.
The solitary New Zealand economic data publication isn’t due until late on Thursday evening. Business NZ Performance of Manufacturing Index registered a score of 59.3 previously.
GBP/NZD Forecast to Soften on Friday
Provided that the data pertaining to New Zealand on Thursday evening prints positively, the New Zealand Dollar is likely to trend higher on Friday. The Consumer Confidence Index may also be of interest as a good indicator of the country’s inflationary situation.
British data will be of little consequence on Friday. However, construction output may be of interest to those trading with the Pound Sterling.
The Pound Sterling to New Zealand Dollar exchange rate was trending in the region of 2.0210 at the close of last week.
