The Pound to New Zealand Dollar exchange rate began the European session in a slightly stronger position having eked out a modest 0.10 per cent gain after New Zealand’s growth figures came in slightly short of estimates.
Sterling had softened against its currency counterparts on Wednesday as minutes from the Bank of England’s latest policy meeting showed that the Monetary Policy Committee was united in its decision to leave rates at record lows in June.
Although the British asset held on to some of these losses overnight, it was able to recoup ground against peers like the New Zealand Dollar.
While economists had been expecting New Zealand to post first quarter growth of 1.1 per cent (on a quarter-on-quarter basis) the South Pacific economy expanded by 1.0 per cent in the first three months of the year.
This was unchanged from the positively revised expansion of 1.0 per cent registered for the fourth quarter of 2013.
Year-on-year, domestic GDP swelled by 3.8 per cent in the first quarter, up from 3.3 per cent annual growth in the final three months of 2013 and beating estimates for a 3.7 per cent gain.
While the monthly figure was slightly disappointing, growth is still steady enough to justify the Reserve Bank of New Zealand’s current interest rate hiking cycle.
In the view of Auckland-based economist Michael Gordon; ‘While the headline was a bit softer than we or the Reserve Bank had expected, taking revisions to previous quarters into account today’s result still suggests that the economy had developed considerable momentum at the start of the year. Today’s numbers will do nothing to dissuade the Reserve Bank from its intention to continue hiking the OCR in its July review’.
The New Zealand Dollar to Pound Sterling exchange rate did drift slightly lower after the growth figures were released but the ‘Kiwi’ was able to retain the upper hand against the US Dollar as the Federal Open Market Committee’s policy statement was more dovish than anticipated.
Instead of hinting that an interest rate increase could be on the horizon, the FOMC asserted that rates would remain on hold for some time to come.
During the European session the UK’s retail sales figures for May were released.
The data showed that UK retail sales softened for the first time in four months. However, the 0.5 per cent month-on-month decline recorded for May was in line with economists’ expectations and largely priced into the market.
New Zealand’s consumer confidence report could cause additional GBP/ZAR movement before the weekend.
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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