On Wednesday, the Pound Sterling to New Zealand (GBP/NZD) exchange rate weakened after the Reserve Bank of New Zealand (RBNZ) suggested that interest rate rises would be needed next year if inflation is to be kept on target. The hawkish comments sent the currency higher despite policy makers repeating their rhetoric that the currency remains overvalued.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate softened despite a cut in payouts to New Zealand’s dairy farmers.The dairy group cut its forecast payout by 60 cents causing economists to estimate that dairy income will be slashed by more than $6 billion compared to the same period as last year.
Market attention is now focusing on the upcoming Reserve Bank of New Zealand interest rate decision for further guidance.
On Tuesday the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate continued to weaken as data showed that manufacturing production in the UK fell for the first time in five months as weak demand from the Eurozone weighed.
According to the London based U.K. Office for National Statistics, manufacturing production decreased by 0.7% in October, disappointing expectations for a rise of 0.2%.
Manufacturing production rose by 0.6% in September, whose figure was upwardly revised from previously reported rise of 0.4%.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate weakened as Tuesdays session progressed due to the release of weaker than forecast UK manufacturing and industrial production data. The report showed that production unexpectedly fell for the first time in five months in October, highlighting the risks to the UK’s economic recovery.
Earlier the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is forecast to make further gains as market attention turns to Wednesday’s Fonterra Board forecasted payment to farmers. Economists are expecting payouts to be lower than previously thought due to falling global dairy prices and a slowing global economy.
Sterling received support earlier in Tuesday’s session after the British Retail Consortium (BRC) released a report which showed that UK retail sales increased by 0.9% on a like-for-like basis from November 2013. The positive report eased some concerns that the UK’s expected slowdown may not be as severe as first thought.
‘November’s retail sales demonstrate continued growth in sales across the board compared to last month. The huge demand for bargain TV’s and other household appliances on Black Friday. Whether for personal use or as presents meant that electricals were the stand out category in terms of sales growth. However retailers also took advantage of the increased footfall generated by Black Friday to sell clothing, effectively bringing forward the start of Christmas sales reductions of autumn/winter stock,’ said Helen Dickinson, director general at the BRC.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
The GBP/NZD exchange rate could make further gains later in the session if the latest UK Industrial and Manufacturing production data comes in positively. Softer than forecast data however and the ‘Kiwi’ could regain some lost ground.
The main event for the New Zealand Dollar this week will be Wednesday’s dairy price auction. With dairy prices, falling analysts are expecting the payout to farmers to be lower than $5 per kilogram of milk solids. Heavy stockpiling of dairy goods by Chinese buyers and falling commodity prices are all having a negative impact.
“The market is waiting for that information – the kiwi is clearly under duress here, We are a commodity currency and we all know there’s a pending milk announcement where we’re expecting the payout to go sub $5,” said Stuart Ive, a senior forex dealer.
GBP/NZD Exchange Rates
The Pound Sterling to New Zealand Dollar Exchange Rate hit a session high of 2.015
The Pound Sterling to New Zealand Dollar Exchange Rate hit a session low of 1.999
