The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate firmed on Wednesday as economists turned their attention to upcoming UK employment data and Bank of England policy meeting minutes. Also weighing on the ‘Kiwi’ was the release of domestic data which showed that the nation’s current account deficit widened.
The data released by Statistics New Zealand showed that the current account deficit widened to NZ$5.01 billion in the third quarter from NZ$1.08 billion in the three months to June. Economists had expected the current account deficit to widen to NZ$5.32 billion in the last quarter.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was little changed on Tuesday as both currencies were weighed upon by growing risk aversion and concerns over a global economic slowdown.
On Monday the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate softened as the session progressed as the ‘Kiwi’ and ‘Aussie’ found support from the ending of the Sydney hostage crisis and as domestic UK data weighed upon the Pound ahead of Tuesday’s inflation data.
Earlier the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate continued to trade near a five-day high as the session progressed. A lack of market moving economic data releases out of the UK and New Zealand led to fairly muted trading conditions.
Earlier the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate climbed to a five-day high on Monday as concerns over falling commodity prices continue to weigh on demand for riskier commodity based assets.
Also weighing upon the ‘Kiwi’ are growing concerns that Australia, New Zealand’s main trading partner will experience a slowdown in its economy. The Australian government has forecast that the nation will see a wider budget gap than forecast this year as tax revenues fall as iron ore prices decline.
‘We are now witnessing the largest fall in the terms of trade since records began in 1959. This has been faster and deeper than anyone expected,’ said Treasurer Joe Hockey in the mid-year Australian economic and fiscal outlook.
With China experiencing a slowdown and now Australia, both of New Zealand could soon follow suit. Already the price of dairy goods, which is the smaller Trans-Tasman nations most exported goods have fallen, and with oil and other commodities tumbling investors are seeking safer options elsewhere.
Australian Hostage Situation Having Little Impact on NZD Exchange Rate
News that an armed gunman has taken hostages in Sydney has so far had little impact on the currency markets but it does not help the risk adverse situation. Armed police have closed down Sydney’s city centre in order to contain the situation. It is not clear whether there is more than one gunman but because an Islamic flag has been placed in the cafe’s window, the incident is likely to be connected to the war against the self-proclaimed Islamic State.
‘Markets are watching wary that it develops into anything more but markets are really scared about the commodity prices at the moment,’ said Sam Tuck, senior manager of currency at ANZ.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
The currency pair is likely to see little movement throughout the rest of the session but the Pound could advance further if data out of the USA comes in strongly and adds to the pressure on the ‘Kiwi’.
As the week progresses the main event for the pairing comes on Wednesday with the release of the Bank of England’s December policy meeting minutes and the latest GDP data for New Zealand.
GBP/NZD Exchange Rates
The Pound Sterling to New Zealand Dollar exchange rate hit a session high of 2.024
The Pound Sterling to New Zealand Dollar exchange rate hit a session low of 2.017
The Pound Sterling to New Zealand Dollar exchange rate is trading in the region of 2.020
