Pound Sterling Continues to Extend Bullish Lead After Upbeat IMF Assessment
The International Monetary Fund (IMF) has said that the UK has demonstrated ‘strong’ growth, deficit reduction and employment progress. According to the latest report, the UK has outstripped other major economies in terms of growth and employment is at a high. The IMF echoed the Bank of England (BoE) inflation forecast, claiming that inflation will reach the 2% mark within the next two years.
However, the organisation has warned of the risks to the UK economy from significantly large levels of government and household debt, as well as a widening trade deficit.
The GBP/NZD exchange rate has extended its gains against the New Zealand Dollar to 0.9%.
Earlier…
Weakened by the Reserve Bank of New Zealand’s -0.25% cut to interest rates, the New Zealand Dollar has been pushed lower by news of falling consumer confidence. Meanwhile, Pound Sterling has advanced despite a struggle with low inflation.
GBP/NZD Exchange Rate News: Wage Growth Hampers Pound Sterling
While the Bank of England (BoE) has left its inflation expectations at 2.0% for the next 12 months, it has also confirmed that it expects inflation to remain under 1% for the first half of 2016. According to the Monetary Policy Summary, ‘The outlook for inflation reflects the balance between persistent drags from factors such as Sterling and world export prices and prospective further increases in domestic cost growth.’
While the interest rate and asset purchase decisions were exactly as predicted, Pound Sterling exchange rates have still suffered thanks to the accompanying meeting minutes, which show the MPC is still in a dovish frame of mind. Issues highlighted include the drag to growth of George Osborne’s austerity measures, a fall in export prices and wage growth failing to show a strong rise despite the labour marketing tightening.
Pound Sterling is currently trending down -0.2% against the Euro (EUR) and US Dollar (USD), while advancing 0.1% against the New Zealand Dollar (NZD) and the Canadian Dollar (CAD).
NZD/GBP Exchange Rate Forecast: Strong US Dollar and Falling Consumer Confidence Dents New Zealand Dollar
The NZD/GBP exchange rate has been quite resilient to the weakening effects of the RBNZ rate cut, managing to start today’s London session having regained almost all the ground it lost during the week, trending just below Monday’s opening level of 0.4466.
Consumer confidence data released during this morning’s Australasian session has shown a drop in optimism, with the index falling -3.3% month-on-month (MoM) after the previous 6.8% surge. The ANZ Consumer Confidence index dropped from 122.7 to 118.7, taking it down to the historical average. The balance of New Zealand consumers who feel worse off has risen between November and December, with expectations of economic ‘good times’ in both the next twelve months and the next five years falling, while expectations of ‘bad times’ have risen.
The ‘Kiwi’ (NZD) has also been softened by the continuing strength of the US Dollar (USD), with traders waiting for the hotly-anticipated rate decision by the Federal Open Market Committee (FOMC) next week.
The NZD/GBP exchange rate is currently trending between 0.4442 and 0.4474.
GBP/NZD Exchange Rate Forecast: Important US Data Could Soften New Zealand Dollar Further
A glut of US data of varying importance is due out this afternoon, with the highlights being the Advance Retail Sales figures and the results of the University of Michigan Confidence survey. Advance Retail Sales are expected to have risen from 0.1% to 0.2%. Positive news here will further add to investor confidence, with the probability of a Fed rate hike already hitting a high of 84%.
The GBP/NZD Exchange rate is currently trending between 2.2337 and 2.2493.
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