With the appeal of the ‘Kiwi’ through the roof following New Zealand’s credit outlook upgrade, the Pound to New Zealand Dollar (GBP/NZD) exchange rate was trending in the region of 1.9432 – 0.3% softer.
Yesterday’s surprising Manufacturing and Industrial Production reports for the UK took a heavy toll on the Pound and while the British asset stealthily advanced from its lowest levels, it continued trading in a weakened state against both the Australian Dollar and New Zealand Dollar.
Losses in the GBP to NZD exchange rate were also incurred as top ratings agency Fitch revised New Zealand’s outlook from stable to positive.
This result is demonstrative of New Zealand’s economic resilience and acts as a form of justification for the Reserve Bank of New Zealand’s decision to continue with the steady hiking of borrowing costs.
Fitch commented on the government’s impressive fiscal consolidation drive and intimated that it expected this year’s general election to have only a minimal impact on New Zealand’s economy. The agency also implied that the local government is on track to record the first operating surplus for six years in the 2014-2015 fiscal year.
The USD/NZD exchange rate hit almost record lows following the decision.
However, it wasn’t all good news as Fitch did reference persistent inflationary pressures and state that long standing weaknesses in the nation (such as the current account deficit) remain.
In a statement Finance Minister Bill English said of the decision; ‘Fitch comments that New Zealand’s economic policy framework, business environment and standards of governance rank among the world’s strongest from a credit perspective, warranting ‘high grade’ sovereign ratings.’
UK reports detailing an unexpected dip in UK house prices and a sharp annual drop in domestic shop prices were also responsible for weakness in the Pound to New Zealand Dollar (GBP/NZD) exchange rate.
UK house prices were shown to have fallen by -0.6% in June, month-on-month. This was double the -0.3% decline anticipated.
Similarly, the British Retail Consortium’s Shop Price Index fell by -1.8% in June, year-on-year, following an annual slide of -1.4% in May.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate was unaffected by New Zealand’s card spending figures.
Card spending was shown to have increased by 0.5% in June, month-on-month, following a more substantial increase of 1.8% in May. Retail Card Spending stagnated last month instead of increasing by the 0.2% anticipated.
Overnight New Zealand Dollar volatility could be triggered by the FOMC meeting minutes, New Zealand’s Performance of Manufacturing Index, China’s trade balance data and Australia’s employment figures.
UPDATED: 10 July, 2014
GBP/NZD Struggles as NZ Fundamentals Impress
Over the course of Australasian trading, both the Pound to New Zealand Dollar (GBP/NZD) and USD/NZD exchange rates declined as the ‘Kiwi’ was bolstered by upbeat domestic data.
New Zealand’s Performance of Manufacturing Index advanced from a negatively revised 52.6 in May to 53.3 in June – well clear of the 50 mark separating growth from contraction.
The South Pacific currency was able to maintain a stronger position against several of its major currency counterparts in spite of the fact that China’s annual Export and Import figures fell short of forecasts.
Before the Bank of England delivered its rate decision Sterling came under a little pressure as the RICS House Price Balance report came in at 53% in June, down from a revised 56% in May and less than the 55% estimated.
Today’s UK Trade Balance figures are likely to have an influence on the Pound to New Zealand Dollar (GBP/NZD) exchange rate in the hours ahead. The USD/NZD pairing could be affected by US initial jobless and continuing claims data.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8805,
New Zealand Dollar,,Euro,0.6471,
New Zealand Dollar,,Australian Dollar,0.9364,
New Zealand Dollar,,Pound Sterling,0.5149,
US Dollar,,New Zealand Dollar,1.1353,
Euro,,New Zealand Dollar,1.5458,
Australian Dollar,,New Zealand Dollar,1.0679,
Pound Sterling,,New Zealand Dollar, 1.9438,
[/table]
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