New Zealand GDP Disappoints - Pound New Zealand Dollar (GBP/NZD) Exchange Rate Struggles to Capitalise

March 15, 2018 - Written by Toni Johnson

STORY LINK New Zealand GDP Disappoints - Pound New Zealand Dollar (GBP/NZD) Exchange Rate Struggles to Capitalise

GBP/NZD Exchange Rate Fluctuates amid Unilever Pick of Rotterdam as HQ instead of London

The Pound New Zealand Dollar (GBP/NZD) exchange rate fluctuated on Thursday, falling in the early hours as markets responded to news that the Anglo-Dutch consumer goods giant Unilever has picked Rotterdam, rather than London as the location for its headquarters, but rising later into the day as the company clarified that the move would not result in the loss of any UK jobs and ‘no change to tax’ paid in the UK.

Indeed, Unilever Chief Executive, Paul Polman asserted that the decision has ‘nothing to do with Brexit’, and that they would still be in the iconic Unilever house, London.

Markets had been worried that the subsequent loss of jobs would harm the UK economy, but with this concern largely quelled demand eventually returned to the Pound.

New Zealand Growth misses its Mark – NZD Exchange Rates Come under Pressure

New Zealand’s growth readings proved softer than expected in the 4th quarter of 2017.

According to figures from Statistics New Zealand (StatsNZ), GDP grew by 0.6% in the December quarter, far below the forecasts of a 0.7% increase.

The yearly reading also came up short by printing at 2.9%, below the market forecast of 3.1% but above the previous period’s 2.7%.

Growth was widespread across many services industries, but the extensive drought that New Zealand experienced towards the end of last year had a massively detrimental effect on their agriculture.

Gary Dunnet, National Accounts Senior Manager at StatsNZ shared this sentiment:

‘Hot, dry weather appeared to have a negative impact this quarter on agriculture production, which fell 2.7%. Falling milk production was reflected in lower dairy manufacturing and dairy exports’.

Sterling initially struggled to capitalise on this news, but as the day progressed and the investor anxiety over Unilever’s HQ decision waned, the Pound soon took the lead (GBP/NZD).

EU Brexit Summit in the Spotlight – What can Markets Expect for the GBP/NZD Exchange Rate?

There’s no escaping it; this week has been a quiet one for UK data.

That could change next week, however, with the market focus liable to switch to the EU’s Brexit summit, and whether demonstrable progress has been made on the Brexit negotiation front.

Markets are keen to assess if the transition period has been hammered out, with notable sticking-points like the Irish border and the rights of EU citizens expected to take centre stage.

If no fresh development has been reached on these fronts then the transition period could be delayed even longer, a prospect that ring alarm bells in the more skittish traders’ minds for a potential ‘cliff-edge’ Brexit.

More notably, however, it could delay talks on trade for even longer, leaving businesses lacking in clarity and liable to hold off on large investments.

Conversely, any agreement that cements the transition period would reduce market uncertainty and potentially drive traders back to the Pound.

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TAGS: Pound New Zealand Dollar Forecasts