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British Pound to New Zealand Dollar Exchange Rate Continues to Tumble as New Zealand Jobs Impress
Published: 7 Feb at 1 PM Tags: Pound Sterling, Dollar Exchange Rate, New Zealand Dollar Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Economy, Inflation,
A lack of supportive factors in Sterling trade this week has left the British Pound to New Zealand Dollar exchange rate in free fall, as the New Zealand Dollar benefits from NZ data and market anticipation for the upcoming Reserve Bank of New Zealand (RBNZ) policy decision.
Market anticipation for the Bank of England (BoE) just isn’t doing enough to support the Pound, as GBP/NZD opened this week at the level of 1.9334 and has since shed over three cents. GBP/NZD hit a three-week-low of 1.8973 on Wednesday and trended near those lows at the time of writing.
Sterling has been weaker since Monday, when Markit’s January UK services PMI was published and fell short of market expectations.
UK services were forecast to have risen slightly from 54.2 to 54.3, but instead slowed to just 53.0. As services make up a notable chunk of Britain’s economic activity, this news led to lower BoE interest rate hike bets and a weaker Pound.
On top of this, Sterling has been pressured by Brexit uncertainties. The UK government has indicated it will not aim to stay in the EU customs union and has also warned UK businesses that it cannot offer guarantees about the future of UK-EU trade.
‘Hard Brexit’ concerns have worsened again in recent sessions, with Britain’s ruling Conservative Party seeing persistent fissures between those advocating a hard Brexit and those who would prefer the government aims for a ‘soft Brexit’.
With Brexit uncertainties and UK economic uncertainties worsened ahead of this week’s key Bank of England monetary policy decision, the New Zealand Dollar has easily benefitted from Pound weakness and pushed GBP/NZD lower.
On Wednesday, the New Zealand Dollar continued this week’s bullish run thanks to an impressive New Zealand job market report from Q4 2017.
New Zealand’s unemployment rate was forecast to have remained at 4.6% in Q4, but the figure instead improved to 4.5%.
This was despite the participation rate beating expectations too. The print was expected to have slipped to 70.8% but instead came in at 71%. The change in employment figure was solid too, only falling from 2.2% to 0.5% rather than the forecast 0.2%.
New Zealand’s Q4 job stats followed other solid data from the past week, including rising consumer confidence. Stronger prices of dairy, New Zealand’s most lucrative commodity, have further boosted market demand for the commodity-correlated New Zealand Dollar.
Thursday’s session is likely to be highly influential for Pound to New Zealand Dollar exchange rate traders, as both the Reserve Bank of New Zealand (RBNZ) and Bank of England (BoE) will be holding monetary policy decisions.
Amid this week’s strong New Zealand job stats, investors will be looking for signs of hawkishness from the RBNZ during Thursday’s Asian session.
If the RBNZ shows any indication that it could become more hawkish in the coming year, GBP/NZD could decline as RBNZ rate hike bets rise and the NZD strengthens.
Of course, the Bank of England policy decision will be highly influential too. The Pound could even mount a solid recovery against the New Zealand Dollar towards the end of the week if the Bank hints that it will refocus on tackling UK inflation.
On the other hand though, if the Bank of England expresses fresh concerns and uncertainties about the strength of Britain’s economy, the Pound to New Zealand Dollar exchange rate could remain weak until next week.
Market anticipation for the Bank of England (BoE) just isn’t doing enough to support the Pound, as GBP/NZD opened this week at the level of 1.9334 and has since shed over three cents. GBP/NZD hit a three-week-low of 1.8973 on Wednesday and trended near those lows at the time of writing.
Sterling has been weaker since Monday, when Markit’s January UK services PMI was published and fell short of market expectations.
UK services were forecast to have risen slightly from 54.2 to 54.3, but instead slowed to just 53.0. As services make up a notable chunk of Britain’s economic activity, this news led to lower BoE interest rate hike bets and a weaker Pound.
On top of this, Sterling has been pressured by Brexit uncertainties. The UK government has indicated it will not aim to stay in the EU customs union and has also warned UK businesses that it cannot offer guarantees about the future of UK-EU trade.
‘Hard Brexit’ concerns have worsened again in recent sessions, with Britain’s ruling Conservative Party seeing persistent fissures between those advocating a hard Brexit and those who would prefer the government aims for a ‘soft Brexit’.
With Brexit uncertainties and UK economic uncertainties worsened ahead of this week’s key Bank of England monetary policy decision, the New Zealand Dollar has easily benefitted from Pound weakness and pushed GBP/NZD lower.
On Wednesday, the New Zealand Dollar continued this week’s bullish run thanks to an impressive New Zealand job market report from Q4 2017.
New Zealand’s unemployment rate was forecast to have remained at 4.6% in Q4, but the figure instead improved to 4.5%.
This was despite the participation rate beating expectations too. The print was expected to have slipped to 70.8% but instead came in at 71%. The change in employment figure was solid too, only falling from 2.2% to 0.5% rather than the forecast 0.2%.
New Zealand’s Q4 job stats followed other solid data from the past week, including rising consumer confidence. Stronger prices of dairy, New Zealand’s most lucrative commodity, have further boosted market demand for the commodity-correlated New Zealand Dollar.
Thursday’s session is likely to be highly influential for Pound to New Zealand Dollar exchange rate traders, as both the Reserve Bank of New Zealand (RBNZ) and Bank of England (BoE) will be holding monetary policy decisions.
Amid this week’s strong New Zealand job stats, investors will be looking for signs of hawkishness from the RBNZ during Thursday’s Asian session.
If the RBNZ shows any indication that it could become more hawkish in the coming year, GBP/NZD could decline as RBNZ rate hike bets rise and the NZD strengthens.
Of course, the Bank of England policy decision will be highly influential too. The Pound could even mount a solid recovery against the New Zealand Dollar towards the end of the week if the Bank hints that it will refocus on tackling UK inflation.
On the other hand though, if the Bank of England expresses fresh concerns and uncertainties about the strength of Britain’s economy, the Pound to New Zealand Dollar exchange rate could remain weak until next week.
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Source: moneytransfer.co.uk