GBP NZD Exchange Fluctuates as Construction PMI Disappoints

April 4, 2017 - Written by Tim Boyer

STORY LINK GBP NZD Exchange Fluctuates as Construction PMI Disappoints

The British Pound to New Zealand Dollar exchange rate surged on Wednesday afternoon, recovering its weekly losses and hitting a fresh 2016 high of 1.7954. This was also GBP/NZD’s best level since September 2016.

Poor risk-sentiment and solid UK services data means the pair has the potential to hold most of its gains for the remainder of the week – unless markets begin to return to risk-correlated currencies.

[Previously updated 05/04/2017]

A disappointing ANX commodity price index weighed on the New Zealand Dollar, suggesting that the domestic outlook is not overly positive at this juncture.

Demand for the Pound, meanwhile, picked up as a result of a bullish UK services PMI, which helped to ease concerns over the economy’s health at the end of the first quarter.

[Previously updated 04/04/2017]

The GBP NZD exchange rate became increasingly volatile today as the UK’s Construction PMI performed worse than expected in March.

Pound New Zealand Dollar (GBP NZD) Volatile as Construction Activity Slows

The Pound New Zealand Dollar (GBP NZD) exchange rate fluctuated this morning as IHS Markit reported that growth slowed again in the UK’s construction sector last month.

According to purchasing managers surveyed by the London-based analytics firm, activity fell from 52.5 to 52.2 last month, with the drop being partly blamed on the slowdown in the UK’s housing market. As Tim Moore, Senior Economist at IHS Markit explained;

‘UK construction firms experienced a growth slowdown in March, with the loss of momentum centred on housebuilding. A weaker trend for residential work has been reported throughout 2017 so far, which provides an indication that the cooling UK housing market has started to act as a drag on the construction sector.’

The decline was also attributed to the diminished value of the Pound which has prompted costs to rise for importing materials, placing more pressure on firms.

However despite the issues facing the industry, the outlook from builders appeared to remain relatively upbeat as they suggested that the drop in Brexit anxiety was leading to greater client demand, after development projects were disrupted following the EU referendum last summer.

New Zealand Dollar Strengthened by Upswing in Dairy Prices

The New Zealand Dollar was bolstered this afternoon following the latest Global Dairy Auction as prices climbed 1.6% and building upon the 1.7% rise at the previous auction.

NZD investors were upbeat following the release as it suggested that the downturn in prices which has marred the dairy market since the beginning of the year could beginning to subside.

However it was not all positive for the dairy industry as while prices rose by 2.4% to $2,924 for New Zealand’s latest export, whole milk powder, butter milk powder fared significantly worse as prices plummeted by 12.2% to $1,588.

GBP NZD Exchange Rate Forecast: UK Services PMI Ahead

The GBP NZD exchange rate may rally tomorrow following the release of the UK’s latest Services PMI as economists predict that it will have climbed from 53.3 to 53.5 last month.

However should the UK’s private sector fail to improve in line with expectations or sees growth mirror the slowdown in the Manufacturing and Construction PMIs then Sterling is highly likely to cede ground as the services industry being one of the main wealth generating sectors for the UK.

Meanwhile those looking to trade in the New Zealand Dollar is likely to slide on Wednesday if the domestic Business PMI drops as expected in March.

Looking further ahead however the Pound may tumble over the coming weeks as the UK government prepares to begin Brexit negotiations with the EU, with markets likely to be upset if UK ministers continue to make aggressive remarks ahead of talks, such as the recent furore over Gibraltar.

Current Interbank Exchange Rates

At the time of writing the GBP NZD exchange rate was trending around 1.78 and the NZD GBP exchange rate was trending around 0.56.

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TAGS: Pound New Zealand Dollar Forecasts