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GBP to NZD Exchange Rate Slips from Highs as Risk-Appetite Rises on North Korea News

April 9, 2018 - Written by Frank Davies

Despite persistent concerns about the possibility of a ‘trade war’ breaking out between the US and China, other aspects have supported risky currencies like the New Zealand Dollar instead and this has kept the British Pound to New Zealand Dollar (GBP/NZD) exchange rate from advancing.

Due to risk-sentiment and weak UK data last week, GBP/NZD fluctuated within a wide region. After opening the week at the level of 1.9345 the pair only advanced slightly by the end of the week and closed at the level of 1.9379. So far this week, GBP/NZD has slipped closer to last week’s opening levels again.

GBP Avoids Losses as UK Housing Prices Boost Confidence in Bank of England Rate Hike


While Sterling has been unable to sustain notable gains against the New Zealand Dollar over the past week, the British currency was supported by fresh UK data on Monday morning.

Halifax’s latest UK house price index report for March beat expectations in both monthly and yearly prints.

The month-on-month figure improved from 0.5% to 1.5% rather than slipping to the forecast 0.2%. The yearly figure advanced from 1.8% to an impressive 2.7% rather than just the forecast 2.1%.

Analysts noted that as UK housing prices had been a major concern of economists since the Brexit vote in 2016, the perceived strong rebound in prices made markets more confident in the resilience of Britain’s economy.

This bolstered market bets that the Bank of England (BoE) would be pressured into hiking UK interest rates again as soon as next month, in May’s policy decision.

However, some analysts were unconvinced that the solid housing prices results were the any indication of some stronger price trend. According to Jonathan Hopper from Garrington Property Finders;
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‘After February’s freeze, the March thaw brought some relief to the property market – but only just.

The month-on-month jump in average prices shouldn’t be taken as a sudden blooming of pent-up demand.

On a quarterly basis, prices are still stagnating; and nationally the market remains stuck in its familiar pattern of tantalising inertia. For every two steps forward, it takes one step back.

That said the economic backdrop hasn’t just thawed – it’s warming up. Slowing consumer price rises mean wages will soon be growing again in real terms.’


NZD Benefits from Hopes of North Korea Denuclearisation


Demand for the New Zealand Dollar has been surprisingly strong over the past week, despite market concerns that the US Presidential administration could spark a ‘trade war’ between the US and China.

However, as the New Zealand Dollar is not as strongly correlated with US and Chinese trade as its rival the Australian Dollar (AUD), it has instead benefitted from other news supporting risky currencies.

On Monday, fresh reports emerged that the isolated nation of North Korea was willing to discuss denuclearisation.

Hopes for nuclear tensions between North Korea and the US or South Korea to fade have left investors less hesitant to buy risky currencies like NZD.

Last week’s New Zealand data included solid consumer confidence stats, but US trade news and other risk-sentiment impacting news has been more influential to NZD trade lately.

GBP/NZD Forecast: New Zealand Business PMI Ahead and Risk-Sentiment Remains in Focus


The New Zealand Dollar could continue to hold against potential Pound gains in the coming week, as UK data is unlikely to be particularly influential and any improvement in risk-sentiment would leave the New Zealand Dollar even more appealing.

Wednesday’s UK trade and production data is likely to be the most influential this week and could bolster Sterling strength if it impresses and supports Bank of England (BoE) interest rate hike bets.

Failing that though, Sterling is likely to be driven by any potential Brexit developments, or the strength of the New Zealand Dollar.

Tuesday’s Asian session will see the publication of New Zealand’s Q1 capacity utilisation and business confidence data from NZIER, but after that the currency will be driven mostly by news affecting risk-sentiment until Friday.

Friday will see the publication of March’s New Zealand business PMI, which could prove influential if it surprises investors.
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