The Pound continues its upward trend against the New Zealand Dollar with commodities losing value following poor Chinese data released overnight. This week's Super Thursday from the Bank of England could be pivotal for Pound to New Zealand Dollar exchange rates. The below table highlights movements for GBP/NZD over the course of the last month.
|Currency Pair||% Change||Difference on £200,000|
The Pound to New Zealand Dollar rate has risen to some of the best rates to buy New Zealand dollars since July 2016. In part a reflection of a more stable Pound, but also the New Zealand currency has been under fire from global pressures. China is a major trading partner of New Zealand accounting for 17% of its exports whilst Australia accounts for 16% of its exports. Its export driven economy relies on a weaker currency and strong international growth and demand.
Overnight Chinese data has shown a mixed bag of data with the Trade Balance improving but overall the Chinese importing far less than expected. The big worry was data last week on Chinese Purchasing Manager’s Index (PMI) in Manufacturing showing a 7 month low. This closely watched survey is highly indicative of global growth and its deterioration is a worrying factor for the New Zealand economy and dollar, because of its close relationship with the Chinese economy, hence the overall weaker Kiwi lately.
This week will be pivotal for the GBP/NZD exchange rate with a series of releases. On the New Zealand side we have the Reserve Bank of New Zealand (RBNZ) Interest rate decision Wednesday evening UK Time. As this release occurs out of hours if you have a New Zealand dollar currency requirement, buying or selling, getting in touch with your broker early in the week is crucial.
With some recent improvements in domestic data the RBNZ could now be more inclined to look at a rate hike sooner than planned. The big problem for the RBNZ is balancing the benefits of a rate hike against the drawbacks.
Overall impressions for the RBNZ are that a hike may occur at some point in the next 12 months but it is unlikely to be at the meeting this week. I would be looking closely for any commentary from the RBNZ which might indicate just how closely they are monitoring domestic as well as international events.
GBP/NZD will also be driven by UK economic data, more of which can be read in the sterling section. Thursday is a series of important releases from the Bank of England. The potential for a higher Pound cannot be discounted although there are still many challenges ahead for the UK economy and the Pound.
With the RBNZ likely to acknowledge improved economic data and Sterling potentially at risk of a tough week clients buying or selling NZD with GBP might wish to get in touch soon and be ready for a very busy middle of the week. If it's your first time trading with us register your interest here.
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