Latest Pound to New Zealand Dollar (GBP/NZD) Strengthens on "Above Forecast" Data

July 16, 2014 - Written by Tim Boyer

STORY LINK Latest Pound to New Zealand Dollar (GBP/NZD) Strengthens on "Above Forecast" Data

The British Pound (GBP) made gains against the New Zealand Dollar (NZD) and the majority of its most traded peers on Wednesday after the Sterling exchange rate complex found support from positive unemployment data.

Further gains were restrained however by the release of a separate report which showed that wage growth in the UK fell more than expected.

The latest NZ Dollar forex rates can be see below:

- the pound to new zealand dollar exchange rate is 0.16 per cent higher at 1.96760 GBP/NZD.
- the euro to new zealand dollar (EUR/NZD) exchange rate is 0.01 per cent hlower at 1.55505.

Earlier in the session the New Zealand Dollar was weighed upon by increased speculation that the Reserve Bank of New Zealand will refrain from raising interest rates at next week’s policy meeting as data showed that inflation and dairy prices waned last month.

Consumer prices in the South Pacific nation advanced by 1.6% from the previous year’s second quarter, below economist expectations for an increase of 1.8%.

Putting further doubt as to whether the RBNZ will raise rates was the news that the Global Dairy Trade Price Index fell by 8.9% in an auction. The fall adds to its decline of 35$ since February 2014.

"The market has been pricing in a 90% chance of a rate hike next week. That is called into question when you combine the milk price falling off a cliff, house price inflation starting to pull back and a market caught somewhat left-sided by weaker CPI data. The market is now pondering whether today's events constitute enough data for the Reserve Bank to pause as early as next week, or at least in September, especially as it would help drive down a currency that governor Graeme Wheeler has called unsustainably high,’ said Stuart Ive, senior dealer at OMF.

Also weighing upon the New Zealand Dollar was yesterday’s testimony by Federal Reserve Chairman Janet Yellen to Congress. The ‘Kiwi’ softened after she said that interest rates in the world’s largest economy could rise sooner than expected if the economy continues to improve.

“If the labour market continues to improve more quickly than anticipated by the committee, resulting in faster convergence toward out dual objectives, then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned,” said Yellen.

The Reserve Bank of New Zealand will deliver its interest rate decision next Wednesday.

GBP to NZ Dollar Higher on UK Unemployment Data

The Pound to New Zealand Dollar exchange rate (GBP/NZD) made gains after the Office for National Statistics released data which showed that the unemployment in the UK fell yet again from 6.6% to 6.5% in the three months leading to April. The number of people out of work dropped by 121,000 to 2.12 million, the lowest figure seen in nearly six years.

A separate report also showed that the number of people claiming unemployment benefits dropped last month by a more-than-forecast figure of 36,300. The total number of claimants now stands at 1.04 million.

Further gains for the Pound were held in check however after another report showed that wage growth in the UK slowed again. Wages including bonuses increased by just 0.3% and those without by 0.7%, the figures mean that wage growth with bonuses is at its lowest performance since 2009 and those without at its weakest level since 2001.

“It’s good to see unemployment falling but with pay growth falling to a record low, serious questions must be asked about the quality of jobs being created,” said Frances O’Grady, the TUC’s general secretary.

The Pound Sterling (GBP) is likely to remain supported as a recent run of positive data including Tuesday’s better than forecast inflation report increases speculation that the Bank of England will raise interest rates before the end of the year. Some economists are expecting a rate rise as soon as November.

GBP/NZD Update - 17th July 2014

The Pound Sterling (GBP) was firmer against a weakened New Zealand Dollar (NZD) on Thursday but was softer against the rest of its major peers after weak wage growth data knocked expectations for a UK interest rise to occur before the end of the year. The ‘Kiwi’ was weakened by a broadly stronger US Dollar and concerns over falling dairy prices.

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