Weak UK Retail Sales Print And Strong NZ Data Sends GBP NZD Exchange Rate To Multi-Decade Low

February 15, 2013 - Written by David Woodsmith

STORY LINK Weak UK Retail Sales Print And Strong NZ Data Sends GBP NZD Exchange Rate To Multi-Decade Low

The Pound New Zealand Dollar exchange rate (currency : GBP NZD) slumped to a new multi-decade low last night, following the release of stronger-than anticipated New Zealand retail sales numbers for Q4 2012. The data revealed a quarter-on-quarter increase in domestic shop sales of a healthy 2.1% during the final three months of last year, sending GBP NZD all the way down to 1.8153.

GBP NZD retraced back up into the mid-1.8200s following the New Zealand release, but highly disappointing UK Retail Sales numbers for January, released within the last few minutes, have sent the pair back down towards last night’s significant level of support.The annualised British Shop Sales figure showed at 0.2% versus an expected 1.6%, heaping renewed pressure on Sterling.

Elsewhere, the euro has given up further ground against Sterling during early trading today, following its tame performance against the Pound yesterday. The upward shift for the Pound to euro exchange rate (currency : GBP EUR) of yesterday was driven by data from the eurozone’s real economy which showed that economic activity in the region had sharply dropped off during the final three months of last year. Today’s selling pressure on the single currency appears to be driven by concerns regarding the European Central Bank’s latest announcement regarding the amount of 3-year loans which Europe’s retail banks have paid back. The last collective repayment, which comprises part of the ECB’s Long Term Re-financing Operation, outstripped analysts’ expectations, leaving the door open for a slightly disappointing reading today. Such an outcome could sent the GBP EUR exchange rate back up towards the 1.1800 level once again.

The main event this afternoon comes in the form of the release of the latest Michigan Confidence survey, which will provide the US Dollar with further direction. The Dollar continues to enjoy strong support in the markets, with the GBP USD exchange rate currently trading in the 1.5400s. A poor showing for the Michigan index this afternoon could send the pair even lower.

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