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Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Rallies as Chinese Economy Weakens

January 21, 2019 - Written by John Cameron

GBP/NZD Exchange Rate Rises as China Sees Slowest Rate of Growth since 1990

Over the course of today’s session the Pound rose against the New Zealand Dollar, and the pairing is currently trading at an inter-bank rate of NZ$1.9129.

This morning, Rightmove released the latest house price index for January which showed that housing asking prices had risen at their slowest pace since 2012.

Despite this, data released from China likely weighed down the New Zealand Dollar as further fears of a global slowdown were sparked by Chinese GDP signalling the economy was cooling.

The data showed that last year saw the slowest rate of growth since 1990, and the levels of growth recorded in the fourth quarter saw similar levels of growth in early 2009, the height of the global financial crisis.

Last Week: Pound Pressured as Poor Retail Sales Weighs on GBP

Last week saw the Pound slip as the currency was hit by worse-than-expected retail sales figures for December, which showed that spending had decreased at the end of 2018.

The slowdown in spending was credited to shoppers bargain hunting in the Black Friday sales in November, which saw Christmas spending pulled forward from December.

As Rhian Murphy, Head of Retail Sales at the ONS stated:

‘Following the increased growth in November, where shoppers snapped up more Black Friday offers as they continue to bring forward their Christmas shopping, retail sales weakened in December.’

GBP/NZD Slips on Back of NZ PMI Rising to Highest Levels Since April

Towards the end of the session last week the Business NZ released December’s business PMI, which rose the highest level since April 2018,

Following the release of this figure the GBP/NZD exchange rate slid and the ‘Kiwi’ was able to take advantage of the Pound’s weakness.

With the end of last week sparking optimism that the US and China were a step closer to improving relations and ending their trade disputes, the risk-sensitive NZD likely benefitted.

The Wall Street Journal reported that Steve Mnuchin, US Treasury Secretary was willing to roll back tariffs on Chinese imports, with President Donald Trump stating on Saturday that a deal ‘could very well happen.’

GBP/NZD Outlook: Will Steady UK Unemployment and Average Earnings Boost Sterling?

Tomorrow morning average earnings data will be released for the UK with the forecast suggesting that the rate of growth will remain steady at 3.3%.

The ILO unemployment rate is also set to be released, which suggests that in January, unemployment will remain steady at 4.1%, and providing the forecast remains steady or drops unexpectedly, the Pound could rally against the ‘Kiwi’.

Tomorrow evening the release of the New Zealand Consumer Price Index for Q4 could see sentiment for the ‘Kiwi’ decrease as the forecast suggests that inflation will be a flat 0%.

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