‘Kiwi’ Recovering to Push down GBP/NZD Pairing as Global Markets Start to Rally
As stocks in Beijing resumed their plunge overnight the ‘Kiwi’ has suffered further softening, with the GBP/NZD exchange rate having climbed still higher to reach a fresh six-year peak of 2.4458. However, with many of the other Australasian markets beginning to recover somewhat in the early hours the paring has begun to cede back its recent gains to trend currently in the range of 2.4200.
Earlier…
Sliding global stock markets have pushed the ‘Kiwi’ (NZD) down severely against the Pound (GBP) today, with the GBP/NZD exchange rate striking a fresh six-year high.
Diary Price Increase Rallied New Zealand Dollar (NZD), Pound (GBP) Improved on UK Public Sector Surplus
Bucking the general trend last week, the ‘Kiwi’ (NZD) benefitted from an increased value for its major commodity export. As had been predicted by pundits the GlobalDairyTrade auction saw the value of milk solids rise for the first time in ten sessions, naturally buoying the currency. This was helped along by Finance Minister Bill English, who commented on the potential benefits that the relatively weak currency could well have upon the domestic economy in general and its other non-dairy exports. However, as the Chinese Manufacturing PMI came in lower than forecast on Friday the New Zealand Dollar suffered a knock-on effect from a decrease in economic confidence, pushing the GBP/NZD exchange rate back up a little to 2.3474.
Sterling (GBP), meanwhile, went into the weekend on a relatively positive note, after spending much of the week struggling as a result of further Bank of England (BoE) interest rate speculation. Friday’s Public Sector Net Borrowing figure unexpectedly revealed the UK’s first July surplus in three years, of a healthy 1.3 billion Pounds, to suggest that the economic situation was perhaps not quite as unimpressive as previously thought.
Chinese Economic Uncertainty and Stock Market Slumps are Weighing on the ‘Kiwi’ (NZD) Today
Early this morning Reserve Bank of New Zealand Deputy Governor Grant Spencer made the comment that domestic interest rate increases are probably ‘off the table’ for the immediate future, in spite of the fact that housing prices in Auckland have been on the increase this past year. Acknowledging that weak exports and a lack inflation demonstrated by the Consumer Price Index will continue to hold back the ‘Kiwi’, his speech was deemed to be realistic but dovish.
Further Chinese stock market volatility, meanwhile, has weighed down on the Australasian basket today as global shares suffered some of the largest one-day loses since the financial crisis. With the commodity market crashing, a distinct trend of risk aversion has dominated trading as investors seek to move to a secure safe-haven, leaving the New Zealand Dollar to flounder. In response the GBP/NZD exchange rate rocketed earlier to a six-year high of 2.5075.
GBP/NZD Exchange Rate Forecast: ‘Kiwi’ Unlikely to Recover from Current Slump
While is seems likely that the current market panic stemming from China will continue to lead the fortunes of the GBP/NZD pairing for some days to come, the ‘Kiwi’ may hope to rally at least somewhat tomorrow with the release of New Zealand’s Trade Balance and the RBNZ 2-Year Inflation Expectation. Better than expected results on either of these could stand to give the South Pacific currency a boost, although further disappointment will only exacerbate its dropping value.
More UK data is due for release in the later week, including the BBA Loans for House Purchase, UK Consumer Confidence Survey and Gross Domestic Product. Should any of these provide evidence of a more robust domestic economy, particularly in the face of the global turmoil, the Pound is sure to see further gains.
Current GBP, NZD Exchange Rates
At time of writing the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is in a strong uptrend at 2.4205, with the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing falling around 0.4129.
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