Pound to New Zealand Dollar Exchange Rate Slips as NZD Bolstered by Risk-Sentiment
While movement has been modest so far this week, the Pound to New Zealand Dollar (GBP/NZD) exchange rate has still slipped from the week’s opening levels and could be in for further losses if upcoming New Zealand data impresses.
GBP/NZD opened this week at the level of 1.9224 and has since fluctuated between highs of 1.9259 and lows of 1.9099. At the time of writing on Wednesday morning, the pair trended below the week’s opening levels – near 1.9190.
Amid a lack of market reasons to buy the Pound (GBP), the New Zealand Dollar (NZD) has easily been able to push GBP/NZD slightly lower despite the market’s mixed demand for the currency.
NZD trade has been supported by the latest optimistic stances from the Reserve Bank of New Zealand (RBNZ), as well as higher demand for risky currencies following reports that the US and North Korea could still see a summit in June.
GBP/NZD investors are currency awaiting more geopolitical developments, as well as New Zealand confidence stats due for publication in the coming days.
Pound (GBP) Exchange Rates Kept Pressured by UK Economic Concerns
Investors have had little reason to buy the Pound over the last week, and amid a lack of notable UK dataset publications in recent sessions Sterling has remained unappealing.
Last week’s UK inflation results fell short of expectations, indicating to investors that British price pressures were subdued and were continuing to fall back from the surge seen last year.
With inflation weaker and the outlook for price pressures uncertain, Bank of England (BoE) interest rate hike bets have weakened. A stronger-than-expected UK retail sales report last week did little to boost BoE bets again.
Britain’s economic performance has been highly underwhelming lately too, with the economy still projected to have grown by only 0.1% quarter-on-quarter in Q1.
On top of Britain’s weak economic outlook, the Pound is still being pressured by persistent Brexit uncertainties.
New Zealand Dollar (NZD) Exchange Rates Slightly More Appealing on RBNZ Comments
The New Zealand Dollar saw a limited boost in demand in Wednesday, as investors digested comments from the Reserve Bank of New Zealand (RBNZ) that were perceived as optimistic.
While the RBNZ did not indicate that it would hike New Zealand interest rates any time soon, the bank expressed confidence that New Zealand’s economy and households would be able to withstand changes in global interest rates and inflation.
With US interest rates rising over the last year, there was some concern that some economies would feel shockwaves. However, the RBNZ’s confidence has put market concerns at ease slightly.
Still, New Zealand’s latest data was underwhelming. New Zealand building permits unexpectedly worsened from 13% to -3.7% in April. The previous figure was revised lower from 14.7%.
The New Zealand Dollar’s strength was also held back by the strength of the US Dollar (USD). While the latest North Korea diplomacy news made risks more appealing, USD benefitted most and its strength weighed on NZD trade.
Pound to New Zealand Dollar (GBP/NZD) Forecast: NZ Confidence and Geopolitical Developments in Focus
Sterling trade is unlikely to see a notable shift in direction in the coming sessions, so the New Zealand Dollar could continue to be the main driver of GBP/NZD movement.
While Friday’s UK manufacturing PMI could give investors a better idea of how Britain’s economy fared this month, it would need to come in notably above expectations for it to have a considerable impact on the murky Pound outlook.
New Zealand business confidence due on Thursday, and consumer confidence due on Friday, are more likely to be influential. Thursday’s NZ export and import prices figures may also inspire some NZD trade.
However, the Pound to New Zealand Dollar (GBP/NZD) exchange rate is even more likely to be driven by any developments in geopolitics.
For example, if US-North Korea or US-China tensions soften again, risky currencies like the New Zealand Dollar will become more appealing.
Besides that, GBP/NZD investors will be anticipating next week’s UK services results and the upcoming dairy price auction.
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