Pound to New Zealand Dollar (GBP/NZD) Relatively Static after Disappointing Chinese Ecostats

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Relatively Static after Disappointing Chinese Ecostats

GBP/NZD Exchange Rate Fails to Capitalise on Poor Chinese Data

The Pound remained in a tight range against the New Zealand Dollar on Wednesday after Asian data caused fluctuations in the Australasian session. The New Zealand Dollar softened when weaker-than-expected Chinese data came to the forefront as investors suspect a slowdown in one of the world’s largest economies. China’s Gross Domestic Product figure slipped in the first quarter from 7.4% to 7.0% year on year, recording the slowest growth in six years.

Industry expert Qu Hongbin commented: ‘Despite a headline growth rate in line with expectations, underlying economic activities appear to have softened further. We expect policy makers to deploy further monetary easing and other growth-supporting measures in the coming weeks.’

If the Chinese central bank does implement further stimulus, the New Zealand Dollar could climb as a result. In previous cases this year, the People’s Bank of China has attempted to spur growth with either rate cuts or additional infrastructure building and the ‘Kiwi’ has responded positively as investors priced in positivity for New Zealand’s largest trading partner. However, not all economists are downbeat about China’s current outlook.

Economist Zhu Haibin commented: ‘The big surprise is that industrial production is very weak. But the service sector is holding up pretty well. If you look on the positive side, this shows that rebalancing is continuing. But it highlights the near-term risk coming from manufacturing and real estate.’

One reason the PBoC made the decision to boost infrastructure projects was to encourage growth into the Chinese economy and some economists have suggested there could be further scope to develop the area further.

An expert in the field Sheng Laiyun stated: ‘China has made great achievements in infrastructure in recent years but infrastructure per capita still trails far behind developed countries. The space for further infrastructure investment is still large.’

UK Election Concerns Limit Pound Gains

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Meanwhile, the Pound has been under pressure from political forces as debate increases in the run up to the UK general election. The Pound is expected to soften significantly as May 7th draws closer and economists suggest that a hung parliament could cause months of weakness for the UK currency. Wednesday and Thursday are both extremely quiet days for UK domestic data lending a lot of the Pound’s exchange rate movement to politics and speculation regarding Friday’s releases.

The UK is scheduled to release its highly influential labour market ecostats which will detail wages and levels of joblessness.

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TAGS: Daily Currency Updates New Zealand Dollar Forecasts Pound Forecasts