The Pound to New Zealand Dollar exchange rate firmed modestly on Friday even as New Zealand’s consumer confidence gauge showed improvement.
On Thursday the Pound to New Zealand Dollar pairing experienced modest fluctuations as New Zealand’s first quarter growth figures fell short of forecasts and the UK’s retail sales report confirmed a 0.5 per cent month-on-month fall in sales in May.
Over the course of local trading the GBP to NZD exchange rate shifted from highs of 1.9597 and lows of 1.9539.
The New Zealand Dollar was feeling the pressure as the potential for the situation in Iraq to escalate rapidly took a toll on higher-risk currencies.
In South Pacific trading the ‘Kiwi’ was little affected by a domestic report showing an increase in the level of consumer confidence in New Zealand.
The consumer confidence gauge jumped by 3.4 per cent in June, month-on-month. A good advance, but not quite strong enough to wipe out the 4.4 per cent drop recorded in May.
The ANZ sentiment index climbed from 127.6 to 131.9 in June.
As ANZ economist Cameron Bagie observed; ‘Sentiment is very solid under the bonnet. That’s an incredibly healthy sign; amidst rising interest rates there are wider influences that are supporting confidence […] All measures – headline sentiment, current and future conditions – are well north of the 100 benchmark, something of a breakeven mark for wallets being opened. At these levels, wallets are not only open, they credit card is in hand.’
The New Zealand Dollar might have held steady against the Pound after this report was published, but it was able to consolidate gains against the US Dollar as the appeal of the ‘Greenback’ remained limited following the slightly dovish Federal Open Market Committee policy statement.
During the European session the UK’s public finance figures showed that the nation’s budget deficit widened as spending climbed and income tax advanced.
In May net borrowing stood at 13.3 billion Pounds, up from the 12.6 billion recorded in the same period of the previous year.
Next week the main economic reports for New Zealand to be aware of include credit card spending and trade balance figures. Volatility in the commodity-driven currency could also occur as a result of China’s manufacturing PMI for June and developments in both the US and Australia.
UK reports of note in the week ahead include Nationwide house price figures, BBA loans for house purchase data, CBI reported sales and GfK consumer confidence.
Updated: 10:25 GMT, 21st June 2014
Over the last three weeks the Pound to New Zealand Dollar (GBP/NZD) exchange rate has experienced considerable fluctuations, moving from highs of 1.99 NZ Dollars to lows of 1.96 NZ Dollars.
While the British Pound has been fluctuating as a result of Bank of England rate increase procrastination, the New Zealand Dollar has been bolstered by the Reserve Bank of New Zealand’s decision to hike borrowing costs for the third time in four months.
Although the slowdown in China, tensions in Iraq and decline in dairy prices have all had an impact on the New Zealand Dollar its strength persists and the currency has defied all of the RBNZ’s attempts to drive it lower.
In the next week any positive reports from New Zealand (and any economic disappointments in the UK) could see the Pound Sterling to New Zealand Dollar exchange rate edge lower still.
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,0.8720,
New Zealand Dollar,,Euro,0.6394,
New Zealand Dollar,,Australian Dollar,0.9264,
New Zealand Dollar,,Pound Sterling,0.5127,
US Dollar,,New Zealand Dollar,1.1465,
Euro,,New Zealand Dollar,1.5597,
Australian Dollar,,New Zealand Dollar,1.0805,
Pound Sterling,,New Zealand Dollar, 1.9522,
[/table]
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