New Zealand Dollar - GBP NZD Exchange Rate Holds Gains despite PMI Data

October 1, 2014 - Written by Ben Hughes

STORY LINK New Zealand Dollar - GBP NZD Exchange Rate Holds Gains despite PMI Data

The Pound to New Zealand Dollar exchange rate (GBP NZD) was able to hold onto its two year high on Wednesday despite the release of disappointing UK manufacturing PMI data.

The most recent forex market conversions look this way (revised 03/10/2014):

The Aus Dollar to New Zealand Dollar exchange rate is trading up +0.09% at 1.11542 AUD/NZD.
The US Dollar to New Zealand Dollar conversion rate is trading up +0.45% at 1.27307 USD/NZD.
The Euro to NZ Dollar rate is trading up +0.09% at 1.60687 EUR/NZD.
The Pound to NZ Dollar exchange rate is trading down -0.1% at 2.04550 GBP/NZD.

The ‘Kiwi’ fell early in the session after it followed its Australian relation lower on the back of weak retail sales data, which weakened demand for the trans-Tasman currencies.

Concerns over the ongoing pro-democracy protests in Hong Kong were also weighing upon Asian and Oceanic currencies.

Also continuing to hit the ‘Kiwi’ is the continuing strength of the US Dollar. The New Zealand currency has been the hardest hit amongst global currencies over the past few months as the markets continue to speculate that the US Federal Reserve will raise interest rates early next year.

‘There was disappointing news in Australia with a weak sales report and we got carried along with that. The overriding thing is the US trend that remains strong but it is getting to very heady territory so as long as the US Dollar keeps rising I don't think there will be too many people looking to buy the ‘Kiwi’ for the medium-term."

Further gains for the Pound were restrained later in the session after data showed that manufacturing activity in the UK expanded at its slowest pace in 17 months last month.

The PMI fell to a reading of 51.6 from the preceding month’s figure of 52.2 and was the lowest seen since April last year. The cause for the slowdown in activity was being blamed upon ongoing weakness in the Eurozone and that the surge seen in the UK manufacturing sector has run its course.

The disappointing data also increased speculation that Bank of England policy makers may choose to hold off on interest rate hikes.

The GBP/NZD exchange could experience volatility on Thursday as economists watch the upcoming GlobalDairyTrade auction closely for signs as to the impacts low dairy prices could have upon the New Zealand economy. Dairy goods are New Zealand’s most traded commodity and with prices, falling by as much as 45% since February the nation’s economy has seen a slowdown as a result.

Sterling meanwhile could find support if Thursday’s Construction PMI report comes in positively. Positive data out of Australia meanwhile could lend some support to the ‘Kiwi’ but any gains will be short-lived due to the publication of eagerly anticipated US Jobless Claims data.

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