The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate firmed on Tuesday as the latest UK Services PMI data beat forecasts.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate hit a session high of 1.9809
Sterling advanced against the ‘Kiwi’ after the latest Markit/CIPS UK Services PMI report beat economist expectations. According to Markit, activity in the UK’s dominant service sector rose to a reading of 58.9 in March, up from the preceding month’s figure of 56.7 and was better than forecasts for 58.1.
NZD/AUD exchange rate falls to 0.9809
Against the Australian Dollar (AUD) the ‘Kiwi’ weakened by over 1% after the RBA announced that it had left interest rates unchanged at 2.25%. The move was widely expected by economists. Over the past few months, the New Zealand Dollar appeared to be on track to reach parity with the ‘Aussie’. The decision by the Australian Central Bank to hold interest rates however could dash those expectations.
‘Further easing may be appropriate over the period ahead, to foster sustainable growth in demand and inflation consistent with the target,’ said RBA Governor Glenn Stevens after the rate decision was announced.
The governor’s comments caused investors to raise their bets that the RBA will now cut rates next month, as tumbling iron ore prices and a weakening domestic economy are likely to spur the bank into action.
The easing back from parity with the ‘Aussie’ could be a good thing as the rising strength of the ‘Kiwi’ has caused a number of New Zealand exporters to become frustrated as the value of their goods has fallen in the nation’s second biggest market.
NZD/USD exchange rate trading at 0.7524
Against the US Dollar the ‘Kiwi’ was trading steadily as last week’s disappointing US jobs data weighed on the American currency.
The report published last Friday by the Washington based Labour Department showed that the US economy created just 126,000 new jobs in March, a figure that was well below the previous months figure and was the smallest increase recorded since December 2013.
The poor jobs report has raised doubts over the strength of the world’s largest economy and caused a number of investors to push back their expectations that the Federal Reserve will choose to raise interest rates at the end of the year instead of in the summer.
The ‘Kiwi’ could regain some ground on Wednesday if the latest Business NZ/Markit PMI comes in positively.
