With markets in Auckland closed for a public holiday the Pound was able to begin the week in a slightly stronger position against the New Zealand Dollar despite the publication of some positive South Pacific data.
A report published by Business New Zealand showed that the nation’s services sector expanded for an eighth consecutive month – making the argument for the Reserve Bank of New Zealand raising interest rates in the near future even more compelling.
The services measure produced a reading of 57.5 in December following November’s positively revised 56.4 result.
A reading above 50 indicates growth, and as BNZ executive Phil O’Reilly observed; ‘While there are always seasonal factors at play during this time of year, the fact remains that new orders and activity/sales are consistently strong, which should feed through into future results.’
In the aftermath of the data publication the New Zealand Dollar jumped to an eight-month high against the ‘Aussie’ but was little changed against the Pound.
Over the weekend Sterling largely retained gains recorded last week in response to surprisingly strong UK employment data and Bank of England Governor Mark Carney’s assurances that interest rates would be held at record lows for as long as necessary to keep Britain’s economic recovery driving forward.
The GBP/NZD exchange rate was therefore achieving highs of 2.0175 as European trading began.
The Pound was also achieving underlying support from the expectation that tomorrow’s domestic growth data will show that UK GDP expanded by 0.7 per cent in the final quarter of last year, down slightly from the 0.8 per cent growth recorded in the third.
If UK growth meets or exceeds expectations the Pound could advance further against the New Zealand Dollar, but with British manufacturing, construction and services figures falling short of the mark the GDP report could deliver a disappointing result.
However, with the RBNZ due to deliver its rate decision on Wednesday and both New Zealand’s trade balance figures and the UK’s consumer confidence report scheduled for release, the GBP/NZD pairing may be in for a volatile week.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8244,
New Zealand Dollar,,Euro,0.6025,
New Zealand Dollar,,Australian Dollar,0.9442 ,
New Zealand Dollar,,Pound Sterling,0.4995 ,
US Dollar,,New Zealand Dollar,1.2146 ,
Euro,,New Zealand Dollar,1.6618 ,
Australian Dollar,,New Zealand Dollar,1.0586 ,
Pound Sterling,,New Zealand Dollar, 2.0058 ,
[/table]
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