Pound to New Zealand Dollar Exchange Rate (GBP/NZD) Rises Despite NZ Consumer Confidence Data

June 20, 2014 - Written by Frank Davies

STORY LINK Pound to New Zealand Dollar Exchange Rate (GBP/NZD) Rises Despite NZ Consumer Confidence Data

The Pound to New Zealand Dollar exchange rate (GBP/NZD) pushed higher on Friday as it continued to find support from investor expectations that the Bank of England will hike interest rates sooner than initially thought.

The ‘Kiwi’ was unable to recover ground against Sterling despite the release of data which showed that consumer confidence in New Zealand rebounded from its lowest level in six months as people became more optimistic over the health of the nation’s economy.

According to ANZ the ANZ-Roy Morgan consumer confidence index climbed to 131.9 in June, a sharp rebound from the figure of 127.6 seen in May. A reading above 100 indicates that optimism outnumbers pessimists.

‘New Zealanders are feeling optimistic on the back of a strong economy where the prospects of higher wages loom as employment increases and the cost of living is supported by low inflation’, ANZ said.

The confidence data adds to the previous days GDP data which showed that the New Zealand economy expanded at a rate of 3.3% year on year in the first quarter of 2014.

The yearly increase was also the fastest pace of growth seen in eight years. Also adding to the sense of confidence was the Reserve Bank of New Zealand’s decision to raise interest rates for a third time in four months and signalled that it intends to make further hikes before the end of the year.

The Pound Sterling to New Zealand Dollar exchange rate is trading up 0.13% at 1.95905 GBP/NZD.

“Sentiment is very solid under the bonnet. That’s an incredibly healthy sign; amidst rising interest rates there are wider influences that are supporting confidence. All measures - headline sentiment, current and future conditions - are well north of the 100 benchmark, something of a breakeven mark for wallets being opened," said ANZ Bank New Zealand chief economist Cameron Bagrie.

According to ANZ index the current conditions index advanced to 127.5 from 123 in May as households felt better off financially compared to a year ago and still considered it to be a great time to buy large-scale or valuable household items.

The future conditions index increased to 134.9 from 130.7 as those expecting good economic conditions in New Zealand over the next 12 months rose to 37 from 30 in May.

Household sentiment strengthened in four of the five regions and was topped by Wellington to reach its highest level since January 2007. Meanwhile, confidence eased marginally in Canterbury, drifting down to a five-month low.

Pound Sterling finds buying support

Sterling was also finding support from data which showed that public sector borrowing increased more than expected. A separate data release however showed that the government burrowed more than the previous year.

Government borrowing was £13.3 billion in May, higher than May 2013 when it was £12.6 billion and higher than City forecasts.

“The government’s long term economic plan is working, delivering economic security for hardworking people. Today’s public sector net borrowing figures continue to be in line with the budget forecast which predicts the deficit to have halved by the end of this year.
But the job is not yet done which is why we must continue to work through the plan that is building a resilient economy,” said the Bank of England earlier today.

The main data release for the ‘Kiwi’ next week is Thursday’s ANZ Business confidence and Balance of trade data.

Latest Pound & New Zealand Dollar Exchange Rates, updated 21/06/2014

The Pound Sterling to New Zealand Dollar exchange rate is at 1.95698 GBP/NZD.
The Euro to New Zealand Dollar exchange rate is at 1.56420 EUR/NZD.
The US Dollar to New Zealand Dollar exchange rate is at 1.15015 USD/NZD.

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