As Thursdays session progressed the GBP/NZD exchange rate softened as more weak data out of Europe and concerns over UK inflation spurred investors to seek higher yields elsewhere.
Earlier in the session the GBP/NZD exchange rate was experiencing mixed trade on Thursday as strong retail sales supported the Pound but at the same time softened it. Concerns over deflation increased as the retail sales data showed that prices fell sharply last month as shops battled to attract consumers.
On Wednesday the Pound to New Zealand Dollar GBP/NZD exchange rate rallied as investors sought out safer assets after Japan announced that it would be holding early elections next month and as the minutes for the Bank of England’s November policy meeting supported Sterling.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate continued to weaken on Tuesday as last weeks comments made by Bank of England Governor Mark Carney continued to weigh and positive retail sales supported the ‘Kiwi’.
Sterling tumbled sharply last week after the Bank of England warned that inflation in the UK could fall below 1% over the next six months, as weakness in the Eurozone and global instability weigh negatively upon the global economy.
Adding to concerns over the UK economic recovery were comments made by British Prime Minister at the G20 summit held in Brisbane Australia. In his speech, David Cameron warned that ‘red warning lights’ are once again flashing over the state of the global economy. He highlighted the standoff between the West and Russia and the weakness of the Eurozone as the main dangers to the UK economy.
Data released last Friday showed that Italy slid back into recession and that the Eurozone only just avoided seeing growth decline into negative territory. With more sanctions against Russia likely we can expect to see further weakness emerge out of the Eurozone.
The New Zealand Dollar meanwhile was supported against a number of major peers after data showed that retail sales in the nation increased at a faster pace than expected in the third quarter of the year.
According to Statistics New Zealand, retail sales increased by a seasonally adjusted 1.5%. Unadjusted sales meanwhile surged by 4.1% from the previous year. The cause for the increase was an improvement in the food sector with supermarket and grocery store sales rising by 1.9% and food and beverage series rose by 3%.
Also rising strongly was fuel, up by 2.5% and textile goods climbed by 6.3%.
Sterling continued to soften as UK inflation data did little to ease fears over low inflation in the country.
