Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Climbs after Favourable UK Data

Modified: Wednesday, 18 February 2015 19:36 BST - Written by James Fuller

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Climbs after Favourable UK Data

The Pound recorded gains against the New Zealand Dollar after favourable UK data emerged and caused sentiment to rise. The UK saw Jobless Claims Change reach -38.6K in January after December’s upwardly revised -35.8K. Economists had estimated a smaller drop in jobseekers of only -25.0K. The better-than-expected figures have led some industry experts to believe the Bank of England may be encouraged to hike rates sooner than the markets have priced in. Economist Ben Brettell commented: ‘Unemployment fell once more to a six-year low of 5.7% in the three months to December, ONS figures released today showed. 30.9m people were in work, an increase of 608,000 from a year earlier. Meaningful real wage growth is starting to emerge too. Average weekly earnings increased by 2.1% including bonuses and by 1.7% excluding bonuses in the three months to December compared with a year earlier. Combined with inflation at 0.3% and falling, this means the squeeze on household budgets is beginning to ease significantly.’

Meanwhile, the New Zealand Dollar was offered a little support when the latest dairy price auction saw values rise. As a result of the 10% gain, Fonterra may now increase its outlook for dairy payouts. The value of New Zealand’s largest export tumbled by around 60% in 2014, causing the ‘Kiwi’ to depreciate and growth predictions to be cut. Economist Nathan Penny stated: ‘While this result has given upward momentum to dairy markets, New Zealand farmers still have to deal with drought (or dry conditions), slowing production growth and the accompanying lower farm revenues in the short term. However, we think farmers are well-placed to manage through this difficult season, and the prospect of a firmer 2015/16 milk price will lift their confidence about the medium term.’

Meanwhile, domestic data for both the UK and New Zealand is a bit thin on the ground over the rest of the week, leaving both currencies vulnerable to any global development. However, there are a couple of data releases worth noting such as New Zealand job Advertisements, Producer Price Inputs and Producer Price Outputs on Wednesday. Meanwhile, Thursday will bring New Zealand’s Consumer Confidence figure, which resided at 128.9 in January. UK CBI Trends Selling Prices and Trends Total Orders are out on Thursday followed by Public Finances, Public Sector Net Borrowing and Retail Sales stats on Friday. Sales in the UK are expected to increase from 4.3% to 5.9% on the year in January.

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