The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate strengthened by around 0.78% on Friday morning.
After having declined significantly on Thursday, the Pound recovered losses on Friday as traders feared the downtrend was overdone. Aiding the advance is likely to be continued positive sentiment towards the Bank of England (BoE) after they hinted that a benchmark rate increase could be the institutions next move.
The New Zealand Dollar, meanwhile, continues to trend lower versus the majority of its most traded currency competitors. The losses can be attributed to speculation that the Reserve Bank of New Zealand (RBNZ) policymakers will cut rates during the next meeting after struggling with low inflation.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.0006.
Yesterday…
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate rallied by around 0.81% on Thursday afternoon.
After British retail sales declined unexpectedly, the Pound softened versus the majority of its most traded currency rivals. The downtrend was aided by ongoing political uncertainty as the general election approaches.
The New Zealand Dollar, conversely, dived across the board despite reasonably positive domestic data. This can be attributed to a speech from Reserve Bank of New Zealand (RBNZ) Assistant Governor John McDermott, who stated that he believes monetary policy should remain stimulatory.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 1.9831.
Pound Sterling (GBP) Exchange Rate Slumps on Retail Sales
With the general election only a few weeks away, and with no clear indication of a majority for any party, investor confidence has taken a significant knock. This has kept the Pound generally bearish over the past few weeks with traders fearing a dramatic change to policy.
Aiding the Sterling downtrend was mixed results from domestic data which erred towards negativity. Public Sector Net Borrowing advanced beyond the median market forecast of a rise from 4.8 billion to 6.5 billion, with the actual result reaching 6.7 billion. However, March’s Retail Sales declined by -0.5% despite expectations of a 0.5% increase.
‘Overall, disappointing,’ said economist Alan Clarke. ‘It may well be that consumers maxed out before Christmas in a discount-fuelled frenzy and the post-Christmas period is experiencing a pause for breath. The monthly data all point towards sluggish Q1 GDP, not the sort of reading that the coalition government will be hoping for.’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate dropped to a low of 1.9670 today.
New Zealand Dollar (NZD) Exchange Rate Dives despite Positive Data
Better-than expected domestic Consumer Confidence and monthly Credit Card Spending data wasn’t enough to cause the ‘Kiwi’ (NZD) to appreciate. This is partly the result of damp market sentiment amid geopolitical upheaval in Europe.
The main reason for the ‘Kiwi’ depreciation, however, was a speech from RBNZ Assistant Governor John McDermott. McDermott suggested that with inflation close to zero the central bank should continue to treat monetary policy as stimulatory.
The outlook for inflation is subdued and ‘suggests that monetary policy should remain stimulatory for a prolonged period,’ Reserve Bank Assistant Governor John McDermott said in a speech on Thursday. ‘Evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates.’
‘At present, the bank is not considering any increase in interest rates,’ McDermott said today. ‘Before considering any tightening in monetary policy we would need to be confident that increased capacity utilization and labour market tightness was generating, or about to generate, a substantial increase in inflation.’
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast to Hold Gains
Given the extent of the appreciation, and with a lack of influential data to curb the trend, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is likely to hold gains for the remainder of Thursday’s European session.
Friday could see volatility cool a little with a complete absence of domestic data pertaining to either nation to provoke changes.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate climbed to a high of 1.9910 today.
