Pound New Zealand Dollar (GBP/NZD) Exchange Rate Muted as NZ Credit Card Spending Leaps

February 22, 2019 - Written by Frank Davies

STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Muted as NZ Credit Card Spending Leaps

Rising NZ Credit Card Spending Fails to Boost Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate

A sharp surge in New Zealand credit card spending failed to weigh on the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate ahead of the weekend.

Even though card spending leapt 6.9% on the year in January this was not enough to shore up the risk-sensitive New Zealand Dollar on Friday.

With confidence in the outlook of the New Zealand economy still limited and global risk appetite diminishing NZD exchange rates were left on a weaker footing.

As central banks have shown an increasing shift towards dovishness in recent days this also weighed on the New Zealand Dollar, with markets speculating over the future direction of Reserve Bank of New Zealand (RBNZ) monetary policy.

Brexit Anxiety Weighs Down Pound Sterling (GBP) Exchange Rates

The mood towards the Pound, meanwhile, diminished in the face of fresh Brexit-based jitters as hopes of imminent progress towards a deal faded.

With time running out before the March deadline and clarity over the future of the UK’s relationship with the EU still decidedly lacking the appeal of Pound Sterling was naturally limited.

Further pressure was in store for the GBP/NZD exchange rate on the back of the latest CBI distributive trades survey, which pointed towards an underwhelming month of retail sales.

As sales proved flat on the month this raised fresh worries over the underlying health of the UK economy and the possibility of a weaker first quarter gross domestic product reading.

New Zealand Dollar (NZD) Exchange Rates Look for Support on Retail Sales Data

NZD exchange rates may find a boost over the weekend, however, if the fourth quarter retail sales data shows an improvement.

An uptick in consumer spending would support economic activity, bolstering confidence in the domestic outlook even in the face of continued global trade worries.

However, any softening in retail sales after the previous quarter’s stagnation would leave the New Zealand Dollar vulnerable to another bout of selling pressure.

If the US and China fail to progress towards a trade agreement and global trade tensions pick up further this could also weigh heavily on NZD exchange rates in the near future.

Higher UK Mortgage Approvals Forecast to Benefit GBP/NZD Exchange Rate

UK mortgage approvals data may give the GBP/NZD exchange rate encouragement on Monday, meanwhile, if borrowing picks up on the month.

Evidence that UK households are not being deterred by Brexit-based uncertainty and pursuing mortgages could see the Pound strengthen sharply.

Increased levels of confidence could limit the drag weakness in other sectors is having on the UK economy, improving the odds of a resilient first quarter gross domestic product.

Another underwhelming performance, however, may see the GBP/NZD exchange rate return to a downtrend next week.

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TAGS: Pound New Zealand Dollar Forecasts