February 5, 2019 - Written by John Cameron
STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as UK Services PMI Plummets
GBP/NZD Exchange Rate Slips as UK Services Fall Well below Expectation
The Pound New Zealand Dollar (GBP/NZD) exchange rate is down today and is currently trading around NZ$1.8926 on the inter-bank market.
Sterling (GBP) failed to gain on the New Zealand Dollar (NZD) after the publication of the UK Markit services PMI figures for January, which fell well below expectation to 50.1.
Duncan Brock, a Group Director at the Chartered Institute of Procurement & Supply, said:
‘As optimism levels remained at some of the lowest levels since the last recession in 2009, the vice-like grip of Brexit is now taking hold of the sector, making it a very difficult start to the year and leaving little hope for improvement next month.’
Today saw the publication of the like-for-like yearly UK retail sales figures for January, which rose to 1.8% against December’s worst performance in 10 years.
Helen Dickinson, the Chief Executive Officer of the British Retail Consortium, commented:
‘There was a welcome return to growth this month after December's disappointing sales figures. But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished.’
These were followed by the publication of the UK yearly new car sales figures for January which fell by -1.6%.
New Zealand’s ANZ commodity price figures for January increased above expectation to 2.1%, providing some uplift for the New Zealand Dollar today.
Chinese banks, meanwhile, are closed for Chinese New Year, and with New Zealand’s largest trading partner lacking any data releases NZD is likely to remain sensitive to any changes in geopolitical risk.
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Down as Barnier Says Brexit Deal ‘Cannot Be Reopened’
Michel Barnier, the European Chief Brexit Negotiator, commented today that the Brexit deal ‘cannot be reopened’, and that the EU is ‘working on alternative solutions during transition’ – further stoking fears of a Brexit no-deal.
The Pound remains weakened as concerns over whether the EU will be willing to renegotiate the Brexit deal on the UK government’s terms.
GBP traders are remaining cautious as Prime Minister Theresa May heads over to Northern Ireland for two days of talks.
Theresa May is expected to say:
‘[W]e will find a way to deliver Brexit that honours our commitments to Northern Ireland … that commands broad support across the community in Northern Ireland … and that secures a majority in the Westminster Parliament.’
GBP/NZD Outlook: Pound Remains Sensitive to Brexit Developments
NZD investors will be looking ahead to tomorrow’s publication of New Zealand’s unemployment rate figures for the fourth-quarter, which are expected to increase, potentially weakening the ‘Kiwi’.
Tomorrow will also see the publication of New Zealand’s global dairy trade price index results, with any price increases potentially lending some further strength to the NZD/GBP exchange rate.
The Lunar New Year will continue to see Chinese banks closed tomorrow, leaving the ‘Kiwi’ sensitive to New Zealand data releases and global political developments.
Any further signs that the US may increase tariffs on Chinese goods should the two nations fail to make a trade deal ahead of 1 March could see the risk-averse NZD fall.
Tomorrow, meanwhile, will see no significant UK data releases, with many GBP traders focusing on Brexit developments as Theresa May wraps up her visit to Northern Ireland and heads to Brussels in an attempt to renegotiate the terms of Brexit.
Sterling traders will be looking further ahead to Thursday, which will see the Bank of England’s latest interest rate decision.
The bank is expected to keep rates static at 0.75%, although any dovish comments in the accompanying forward guidance notes could see the GBP/NZD exchange rate drop.
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TAGS: Daily Currency Updates New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts