Pound New Zealand Dollar (GBP/NZD) Exchange Rate Climbs as NZ Business Confidence Plummets

April 30, 2018 - Written by John Cameron

STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Climbs as NZ Business Confidence Plummets

Pound New Zealand Dollar (GBP/NZD) Exchange Rate UP despite Disappointing Q1 Growth

Sterling hit the ground running against the New Zealand Dollar (GBP/NZD) on Monday, limited somewhat by last week’s disappointing UK growth readings but climbing thanks to the current strength of the US Dollar (USD) and an upbeat UK business confidence survey.

British businesses are starting to feel upbeat about the economy, according to the latest Lloyds Bank survey, with over half of the survey’s respondents claiming they were more optimistic than they were last quarter.

It should also be pointed out, however, that confidence across London took a hit and the survey was taken before the latest disappointing growth results.

Nonetheless, this news helped support the Pound.

Hann-Ju Ho, Senior Economist at Lloyds Commercial Banking stated:

‘The uplift in economic optimism this month, against a backdrop of slightly eroding business prospects, is a positive move and may well be reflected in Sterling returning to pre-Brexit levels against the dollar. It will be interesting to see if that trend continues’.

New Zealand Dollar (NZD) Exchange Rates Limited by Disappointing Business Confidence

New Zealand’s latest business confidence survey proved disappointing today - contrasting the UK’s rise in business optimism.

According to the latest ANZ Bank survey, the sentiment amongst New Zealand businesses declined to a score of -23.4 in April, down from the previous score of -20 and the forecast of -17.

This was due to a broad decline in all four sub-sectors.

ANZ Bank New Zealand Chief Economist Sharon Zollner shared his thoughts on the readings:

‘All sectors are in the red, with services the least pessimistic and agriculture the most. Agriculture did manage a small gain on March, but construction plummeted to its lowest level since 2008’.

Another major contributor to today’s weakness, however, has has been the persistent strength of the ‘Greenback’, with last week’s substantial rise in US bond yields driving markets away from the commodity currencies.

Reserve Bank of New Zealand Rate Decision LOOMS – What can we Expect for the GBP/NZD Exchange Rate?

The Pound New Zealand Dollar (GBP/NZD) exchange rate could see greater volatility this week as markets respond to the Reserve Bank of New Zealand’s (RBNZ) rate decision and the latest bi-weekly global dairy trade price auction.

Markets do not currently expect the central bank to raise interest rates at this meeting, particularly with no evidence of a broad-based rise in domestic price pressures.

Their sentiment, however, could push GBP/NZD up or down, but given that this week will also feature the US Federal Reserve’s rate decision it is unlikely that the ‘Kiwi’ Dollar will find much room to manoeuvre.

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TAGS: Pound New Zealand Dollar Forecasts