The Pound (GBP) has continued to struggle against the New Zealand Dollar (NZD) today, falling by around -0.8% this afternoon.
Sterling’s losses in the GBP/NZD pairing are mainly down to lower confidence in the US Dollar, which has boosted the New Zealand Dollar.
The latest data to weaken the US currency has been a factory orders reading for April, which has shifted from 1.7% to -0.8% for the monthly figure.
(Last updated 4th June, 2018)
Risk of Slowing UK Services Sector Triggering GBP/NZD Exchange Rate Decline
The Pound (GBP) has faced strong headwinds in trading against the New Zealand Dollar (NZD) recently, falling near a five-month low in the pairing.
The GBP/NZD exchange rate could get worse in the near-term, when May’s UK services sector PMI comes out on Tuesday.
Because services activity contributes the most towards economic growth, the reading is more high-impact than other UK PMIs.
With that in mind, Pound Sterling is on track to rally against the New Zealand Dollar if the services PMI rises as forecast.
Even a small increase for May’s reading could boost the Pound, as it would suggest resilience in the face of business uncertainty and Brexit-based concerns.
On the other hand, an unexpected drop could shatter trader confidence and cause even greater GBP/NZD exchange rate losses.
Upcoming BoE Speeches may Further Weaken GBP/NZD Exchange Rate
Beyond the potential upset of the services PMI, the Pound (GBP) could also see movement this week from speeches by Bank of England (BoE) policymakers.
Jon Cunliffe will be speaking on Tuesday, followed by Silvana Tenreyro and Ian McCafferty on Wednesday and Dave Ramsden on Thursday.
For GBP traders, the main question is whether the BoE is likely to raise interest rates in August.
Explicitly suggesting rate hikes on a monthly basis is unlikely from the policymakers, but even the hint of a 2018 rate hike could boost the Pound.
Barring Mr McCafferty, all of the above speakers are considered neutral when it comes to monetary policy.
This means that if Tuesday’s services PMI proves disappointing, a bulk of the speakers might not consider an August interest rate hike as the best decision.
If there are signs that 2018 could be another year of frozen interest rates, the GBP/NZD exchange rate could fall further before the weekend.
Are New Zealand Dollar to Pound (NZD/GBP) Exchange Rate Gains ahead on Dairy Price Data?
The New Zealand Dollar (NZD) could rise further against the Pound (GBP) on Tuesday, when the Global Dairy Trade (GDT) price index will be announced.
This measures changes to global dairy prices and previously showed a significant 1.9% rise.
If the latest reading also shows growth then the New Zealand Dollar could appreciate.
Higher dairy prices are nationally beneficial, given the dairy industry’s prevalence across New Zealand.
Another price rise isn’t out of the question, given that the NZ government is planning to cull cattle to stop the spread of bovine-based disease in the country.
Although the cull will be bad news for dairy farmers, because it would reduce dairy output so overall prices could rise because of reduced quantities of the commodity.
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