Pound Advances against New Zealand Dollar (GBP/NZD) after Weak Kiwi Stats Surface

Modified: Wednesday, 29 April 2015 16:56 BST - Written by James Fuller

STORY LINK Pound Advances against New Zealand Dollar (GBP/NZD) after Weak Kiwi Stats Surface

GBP/NZD Gains after NZ Business Confidence Falls

The Pound climbed against the New Zealand Dollar after weak Kiwi data emerged. The ‘Kiwi’ exchange rate took a hit when the New Zealand Business Confidence index took a tumble from 35.8 to 30.2 in April. The ecostat registered a six-month low and added further to speculation that the New Zealand economy may be in for an interest rate cut in the near future.

Last week Reserve Bank of New Zealand Assistant Governor John McDermott commented: ‘Evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates. There are some areas of uncertainty surrounding the outlook for capacity pressures, including the lingering effects of the recent drought in parts of the country, fiscal consolidation, lower dairy incomes and the impact of the high exchange rate on some export and import substitution industries.’

Dairy Prices Weigh on Kiwi

Dairy has been a factor seriously weighing on the New Zealand Dollar after the price of the Oceanic nation’s largest commodity tumbled by around 60% in the past 10 months. Recent auctions have seen some slight recovery in dairy prices, a help to NZ farmers and a factor that has boosted the ‘Kiwi’ exchange rate considerably. However, some economists are suggesting that further milk payout cuts could occur. Westland, the world’s second largest dairy co-operative has slashed its payout forecasts on Tuesday—a factor that could have devastating consequences for the New Zealand economy.

Westland representative Rod Quin stated: ‘Our payout’s mainly based on skim milk powder and casin returns and they have for the most part of this season been slightly better than whole milk powder.’
Westland’s payout range is expected to remain between $4.90 - $5.10 per kilo from the former more favourable $5.00 - $5.40. However, the New Zealand Dollar is expected to experience some major market swings later on Wednesday when the RBNZ announces its latest interest rate decision.

GBP Fluctuates after House Price, Reported Sales Data

Meanwhile, the Pound fluctuated against other majors on Wednesday with the release of mild influence data. UK House Price figures recorded 1.0% growth in April and 5.2% on the year. The ecostat renews hope that perhaps the UK housing market isn’t undergoing a slowdown as drastic as some may have expected. The UK has 140,000 new houses built last year, still a long way off demand.

Industry expert Robert Gardner commented: ‘What we need for a sustained upturn is for demand and supply to increase together.’

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TAGS: Daily Currency Updates New Zealand Dollar Forecasts Pound Forecasts