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GBP/NZD Fluctuates as NZD GDP Disappoints Forecasts, Dovish FOMC Boosts New Zealand Dollar Exchange Rate

June 17, 2015 - Written by Admin

GBP/NZD Falls after FOMC Announcement, Declines Limited due to GDP Disappointment

While bets that the FOMC will put off interest rate adjustments until December helped commodity-driven currencies like the 'Aussie' and 'Kiwi' gain on Thursday, the GBP/NZD losses were limited thanks to disappointing growth figures for New Zealand.

The nation's economy was shown to have expanded by just 0.2% in the first quarter on a quarter-on-quarter basis. Growth of 0.6% had been projected. This result could encourage the RBNZ to cut borrowing costs further so the report had a detrimental impact on the 'Kiwi's performance.

The Pound Sterling to New Zealand Dollar exchange rate was trending in the region of 2.2936


GBP Trends Higher against EUR, USD, AUD after UK Employment Report

The Pound advanced against a host of other major peers after UK data printed favourably. The UK’s wage growth data registered a surprisingly large increase from 2.3% to 2.7% on the year in April, rather than the 2.5% expected. Meanwhile, the UK’s Unemployment Rate remained at 5.5%.

UK Economic Plan Working Says Government – Pound Sterling GBP Exchange Rate Rises Today

Employment Minister Priti Patel commented: ‘Today’s figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before.’

However, not everyone has remained so upbeat regarding the UK’s tighter labour market. The GBP exchange rate surged as investors priced in the possibility of a Bank of England interest rate hike, but some industry experts are a little less optimistic about future rises.

Economist Chris Williamson stated: ‘It’s uncertain as to how much pay growth will continue to accelerate as low inflation will hold down annual pay reviews.’

New Zealand Growth Data Forecast to Significantly Impact NZD Exchange Rate News

Meanwhile, the New Zealand Dollar is gearing up for an influential few days ahead with the release of the NZ Gross Domestic Product stat due out late on Wednesday. The data is expected to be a major source of market movement and is currently tilted toward the downside. Economists expect to see a decline from 3.5% to 3.1% on the year in the first quarter and such a move could sink the ‘Kiwi’ exchange rate. Thursday will see the release of NZ Job Advertisements while Friday will follow with the latest Kiwi Consumer Confidence ecostats.

Future GBP/NZD Exchange Rate Outlook: RBNZ Expects Dairy to Weigh on New Zealand Dollar

The New Zealand Dollar is likely to be continually hindered by dairy prices in the near future which have fallen by around 60% in the past twelve months. The decrease has seen the Reserve Bank of New Zealand downgrade its economic growth expectations and weighed on the NZD exchange rate.

UBS stated: ‘According to the RBNZ forecast, Fonterra’s current milk payout guidance of NZD 5.25 per kilogram of milk solids for the 2015/16 season is now unlikely. The RBNZ also cited the pick-up in petrol prices in 2Q15 as likely to subdue household spending. Consequently, for the year ending March 2016, the RBNZ had cut its economic growth forecast to 3.3%, compared to 3.8% from its March statement. The positive output gap forecast has also been reduced to 0.4 from 1.0.’

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