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Pound Sterling to New Zealand Dollar Exchange Rate News: GBP/NZD Movement Forecast

September 5, 2016 - Written by Tim Boyer

New Zealand Dollar (NZD) Exchange Rates Trended Higher on Risk Sentiment



While Sterling was generally trending in a stronger position on Monday, the Pound New Zealand (GBP/NZD) exchange rate's gains were limited as a result of 'Kiwi' strength.

Risk appetite remained generally higher on Monday in the wake of last week’s weaker-than-expected US Non-Farm Payrolls report, given the more limited odds of the Federal Reserve raising interest rates in the near future.

The appeal of the New Zealand Dollar (NZD) improved further in response to the ANZ Commodity Price report for August, with the headline figure rising from 2.1% to 3.2%.

This would seem to bode well for Tuesday’s GlobalDairyTrade auction, raising hopes that the price of milk solids could continue to strengthen and thus offer further support to the New Zealand economy.

With the US Dollar (USD) still soft and the latest Chinese data also bettering expectations there was little reason for investors not to favour the higher-yielding ‘Kiwi’ at the start of the week.

Pound Sterling (GBP) Boosted by Robust Services PMI



After a slightly slow start confidence in Pound Sterling (GBP) exchange rates surged as the UK Services PMI for August showed the measure’s strongest single rebound since its creation more than two decades ago.

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The measure strengthened on the month from 47.4 to 52.9 to suggest that the domestic economy had been quick to shake off the initial negative impact of the vote to leave the EU, encouraging investors.

Even so, while the service sector accounts for more than three quarters of the UK’s economic activity markets were inclined to dial back their bullishness due to the rather volatile nature of the survey, which is primarily a measure of sector sentiment rather than hard data.

The economy may struggle to maintain its recovery in the coming months, though, with researchers at BBH noting:

‘The combination of no immediate policy changes, including triggering Article 50 and the divorce proceedings, and the decline in Sterling and the fall in interest rates may be underpinning British resiliency. Because of the structure of the UK economy, and especially the high proportion of household debt (mortgages) are at variable rates, the fall in rates can be passed through relatively quickly. It has a one-off impact, as does the decline in Sterling.’


Higher Dairy Prices Forecast to Weigh on GBP/NZD Exchange Rate



With UK data limited on Tuesday the primary influence on the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is expected to be the latest dairy auction results.

If prices are found to have continued strengthening in spite of persistent market uncertainty and growth worries than the New Zealand Dollar is predicted to rally, particularly if the latest US data continues to prove disappointing.

Later in the week investors will be paying attention to the UK Manufacturing and Industrial Production figures for July, which are forecast to show an increase in output on the year.

Should production be found to have weakened in response to the referendum, however, then the GBP/NZD exchange rate is likely to return to a downtrend.
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