The Pound New Zealand Dollar (GBP NZD) exchange rate softened this morning following the release of some downbeat production data from the UK.
Data compiled by the Office for National Statistics (ONS) shows that both the UK’s manufacturing and industrial sectors saw production fall in the first month of the year, dropping from 2.2% to -0.9% and 0.9% to -0.4% respectively.
However analysts suggest that drop is simply the sectors correcting themselves after unusually high activity at the end of last year, with long-term data remaining healthy they feel there is little need for concern over future growth this year.
Ruth Gregory, UK economist at Capital Economics said;
‘These sectors only account for around 20% of the economy … But they should nonetheless prevent GDP growth from slowing too much in Q1. Today’s figures add to the evidence that economic growth has maintained a decent pace at the start of the year and suggest that growth is starting to become better balanced.’
This was supported by the narrowing of the UK’s trade deficit over the same period as exports saw a slight uptick at the start of the year, with UK goods becoming more attractive to foreign buyers thanks to the weaker Pound.
Meanwhile the New Zealand Dollar struggled to exploit the weakness in Sterling this morning thanks to the overwhelming strength of the US Dollar.
Investors have become increasingly risk adverse over the last couple of weeks ahead of an imminent rate hike from the Federal Reserve, leaving the ‘Kiwi’ in droves as they flock to the US market.
However NZD GBP may make some solid gains at the start of next week with the release of Westpac’s latest domestic Consumer Confidence survey if it shows that household sentiment remains robust
Meanwhile the Pound may find itself on the back foot as Brexit jitters return with gusto as the House of Common prepares to vote on amendments made to the government’s Brexit bill by Peers this week.
Markets are not holding their breath for the amendments to pass however as the Conservatives majority in the lower house will likely lead to them being rejected in a vote.
Current Interbank Exchange Rates
At the time of writing the GBP NZD exchange rate was trending around 1.75 and the NZD GBP exchange rate was trending around 0.56.
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