Pound Advances versus New Zealand Dollar (GBP/NZD) as NZ Trade Deficit Expands

December 18, 2014 - Written by Ben Hughes

STORY LINK Pound Advances versus New Zealand Dollar (GBP/NZD) as NZ Trade Deficit Expands

Currency News UK Brings You Our Latest Pound to New Zealand Dollar Exchange Rate Outlook

The Pound gained against the New Zealand Dollar as the antipodean nation’s trade deficit expanded in the third quarter. The deficit grew to -$5.0 billion New Zealand Dollars after a -$1.1 billion in the second quarter. Statistics New Zealand stated: ‘With the value of goods exports falling and imports rising, the current account deficit is now the largest it has been in nearly six years.’ The New Zealand Dollar has softened in recent weeks as a result of softer dairy prices. However, New Zealand Gross Domestic Product figures are still to come and could cause major New Zealand Dollar movement. At present, economists have forecast a fall in quarter three from 3.9% to 3.3% on the year.

However, other events that could affect the ‘Kiwi’ commodity currency are New Zealand Job Advertisements and Net Migration figures on Thursday, followed by Business Confidence, Activity Outlook and Credit Card Spending on Friday. Moreover, any developments in dairy prices could also affect the New Zealand Dollar. Meanwhile, the Pound was little changed by the Bank of England’s meeting minutes which showed another split vote in the Monetary Policy Committee (MPC) on the topic of borrowing costs. The vote remained at 2:7, with BoE hawks Ian McCafferty and Martin Weale voting in favour of immediate interest rate hikes.

The minutes read: ‘For most members, the outlook justified maintaining both the current level of Bank Rate and the stock of asset purchases financed by the issuance of central bank reserves. Inflation in the coming months would be pushed further below the target by the contribution from energy and lagged effects had passed through, for a significant period. Recent signs of a pickup in wage growth were promising. But, as yet, pay growth was only roughly in line with, rather than in excess of, productivity growth.’

In addition, UK Unemployment failed to soften to 5.9% from 6.0% in the three months through October. Furthermore, Employment Change reached 115K instead of the 137K economists had forecast. Thursday could offer the Pound some movement with the release of UK Retail Sales figures. Present predictions suggest that November’s annual figure will dip from 4.6% to 4.5%.

The release of the US Federal Open Market Committee’s interest rate decision on Wednesday could shake other major currencies such as the Pound and New Zealand Dollar. If it appears that the US Federal Reserve is closer to raising interest rates as the first of the Group of Seven (G7) developed nations, the US Dollar is likely to rally. Furthermore, the New Zealand Dollar is likely to be less appealing as a commodity currency during a global slowdown which is speculated to be taking place at the moment.

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TAGS: Pound New Zealand Dollar Forecasts