‘Kiwi’ (NZD) and Pound (GBP) Waiting for Potential Rallies on Upcoming UK Retail Sales and Today’s Fed Rate Decision
The GBP/NZD exchange rate is trending narrowly in the region of 2.4414 this morning as markets await the August UK Retail Sales data and this afternoon’s crucial Federal Open Market Committee (FOMC) meeting. With the general expectation now being for the Fed to hold off on hiking rates in this session the ‘Kiwi’ (NZD) could be in for another strong rally on improved risk sentiment.
Earlier…
A general improvement in UK unemployment data has sent the GBP/NZD conversion rate on an uptrend this morning.
‘Kiwi’ (NZD) Bullish after Dairy Prices Continue to Rise, Sterling (GBP) Experienced Downturn on Weakened UK Inflation
It was another disappointment for the Pound (GBP) yesterday as the UK Consumer Price Index printed at 0%, showing that inflation has not grown on the year. In line with the Bank of England (BoE) revising down their 12-month Inflation Forecast from 2.2% to 2% last week this figure did not appear to bode well for the strength of the domestic economy’s state of recovery. As this seemed to suggest that a BoE interest hike will need to be held off for some months to come, investor reticence caused the GBP/NZD exchange rate to slump from its uptrend, falling to 2.4321.
Overnight the ‘Kiwi’ (NZD) was substantially boosted by the third consecutive session of price growth on the GlobalDairyTrade auction, with milk powder trading up 16%. While this sustained improvement lent support to the dairy industry on which the New Zealand economy relies, experts have continued to caution that the turnaround will not be more than temporary. As market-leader Fonterra has been reducing its offerings at recent auctions it would seem that supply remains in excess of demand, and that there will be further contractions and weakening in the commodity over the coming year. Nevertheless, this more pessimistic view did not prevent the GBP/NZD conversion rate from substantially declining to 2.4109.
Pound (GBP) Bolstered as UK Unemployment Rate Beats Predictions Today to Appreciate GBP/NZD Conversion Rate
This morning’s UK unemployment data, however, was fast to prompt a rally for Sterling as results proved generally hawkish. Employment Change in the last three months increased from -63,000 to 42,000 while the domestic Unemployment Rate unexpectedly fell from 5.6% to 5.5% and Average Weekly Earnings also showed improvement. Even though the Claimant Count was unchanged the Pound surged rapidly across the board, pushing up the GBP/NZD pairing to a daily best of 2.4311 and reclaiming much of the value it had shed over the previous day. This more positive showing has also naturally led to renewed speculation that the BoE may still opt to increase interest rates before the second quarter of next year.
GBP/NZD Exchange Rate Forecast: ‘Kiwi’ Could See Rally on a Fed Interest Rate Decision
Although UK Retail Sales for August are due for release tomorrow the more significant impact upon the GBP/NZD conversion rate stands to be the Federal Open Market Committee (FOMC) decision on US interest rates. Any tightening of policy stands to negatively affect the prospects of the New Zealand Dollar as a stronger ‘Greenback’ (USD) would inevitably weigh heavily on the commodity markets.
Also to be published tonight is the second quarter New Zealand Gross Domestic Product. Expected to reveal a decline from 2.6% to 2.5%, this figure could prove decidedly bearish for the ‘Kiwi’, particularly if it produces a shortfall. Any improvement, however, is likely to be rapidly overshadowed by the Fed decision.
Current GBP, NZD Exchange Rates
At time of writing the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is continuing to trend positively in the region of 2.4316, with the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing on a downtrend at 0.4111.
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