NZ Dollar Rate Today: GBP/NZD Falls as UK Economic Outlook Dampens, Dairy Prices Soften

April 1, 2015 - Written by John Cameron

STORY LINK NZ Dollar Rate Today: GBP/NZD Falls as UK Economic Outlook Dampens, Dairy Prices Soften

The Pound softened against the New Zealand Dollar as the UK currency fell against a host of other majors on Wednesday. The British economy had started the day with upbeat news when the Manufacturing Purchasing Managers Index hit an eight-month high in March—a move that swatted away fears of an economic slowdown in the nation. Economist Lee Hopley commented: ‘The PMI suggests that, if anything, the sector has stepped up a gear at the start of this year. While the story of healthy domestic demand has become familiar over the past year or so, evidence is also mounting that the sector’s export prospects are finally turning a corner.’

The ecostat emerged in the wake of Tuesday’s upbeat final Gross Domestic Product reading which showed growth of 3.0% took place in the fourth quarter of 2014, rather than the 2.7% flash reading. In recent months speculation has heightened as to whether the UK is undergoing a slowdown after strong progress was made last year. However, Tuesday’s upbeat GDP figure kept some industry experts positive. Economic expert Robert Peston commented: ‘The UK’s economic performance in the round and as it touches people, is definitely improving – and looks good compared with competitor nations, especially those across the Channel. GDP or national income per capita is 4.8% above where it was at the election – although it is still 1.2% below its peak at the start of 2008, before the Great Recession and financial crisis.’ However, Wednesday saw the Pound tumble against other majors when the Office of National Statistics stated that productivity in the UK slipped 0.2% lower in the final months of 2014.

Meanwhile, the New Zealand Dollar was offered little support against other majors when dairy prices took yet another dive. The latest auction saw values record a massive -10.8% decline. As dairy is New Zealand’s largest export, any price changes can severely hinder the ‘Kiwi’ and the nation’s economic growth as a whole. The most notable depreciation came from butter milk powder which recorded -25.1% contraction. Whole milk powder fell by -13.3%, while cheddar came in third with a -10.5% decline.

Thursday could be an interesting day for New Zealand Dollar movement with the release of Kiwi House Price and Commodity Price data. In addition, Chinese PMI’s out on Friday have the potential to influence the Oceanic currency as China is the Antipodean region’s largest trading partner.

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