March 18, 2021 - Written by John Cameron
STORY LINK Pound New Zealand Dollar Exchange Rate News: GBP/NZD Pushes Higher as New Zealand GDP Disappoints
The Pound to New Zealand Dollar exchange rate is gaining this morning after a disappointing Q4 GDP rate reading from New Zealand.
At the time of writing, the GBP/NZD pairing is currently trading at around NZ$1.9316 as markets await the Bank of England’s (BoE) latest interest rate decision this afternoon.
Pound Exchange Rate Trends Higher as UK Markets Await BoE Decision
The Pound (GBP) is being supported this morning as investors and markets readily await the BoE’s latest interest rate decision for March.
Though expected to remain at 0.1% to help combat the ongoing effects of the coronavirus pandemic, Pound investors will be keeping an eye on whether the bank takes an optimistic stance regarding the UK’s economic recovery.
Earlier this week, BoE Governor Andrew Bailey said that he was ‘more positive but with a large dose of caution’ which has caused investors to believe the bank will take a similar tone when announcing the interest rate decision.
Further supporting the Pound this morning is the continuing success of the vaccine rollout, with over 25 million people in the UK now receiving a dose of the vaccine.
Despite comments from the NHS that there would be a ‘significant reduction’ in vaccine supplies from March 29th, both Pfizer and AstraZeneca have denied any shortages.
A spokesperson from AstraZeneca commented:
’Our UK domestic supply chain is not experiencing any disruption and there is no impact on our delivery schedule.’
New Zealand Dollar (NZD) Exchange Rates Struggles on New Zealand GDP Slump
Following a surprise slump in Q4 GDP data from New Zealand, NZD has retreated against many of its counterparts.
Although New Zealand has outperformed many countries when it comes to the coronavirus pandemic, it seems that New Zealand’s lockdown restrictions at the start of 2020 had an effect on the 1% drop in GDP recorded in Q4.
The report from StatsNZ regarding the GDP data said:
‘Despite fewer restrictions on domestic travel and business activity in the December 2020 quarter compared to previous quarters, the decline in annual GDP is largely due to the effects of the alert level 4 national lockdown earlier in 2020.’
StatsNZ national accounts senior manager Paul Pascoe commented on the sharp decline in GDP saying:
‘Activity in the December quarter showed a mixed picture, some industries are down but others have held up or risen, despite the ongoing impact of Covid.’
Furthermore, the Federal Reserve’s decision to keep interest rates close to 0% until 2023 caused a sharp rally in the US Dollar today as treasury yields jumped to 1.7%, the highest since the start of 2020, causing the NZD and other risk-correlated currencies to suffer.
GBP / NZD Exchange Rate Outlook: UK Consumer Confidence in Focus
This afternoon the GBP/NZD exchange rate will be driven by the BoE’s interest rate decision, which could see Sterling heading higher is the bank takes a positive tone.
Heading into tomorrow Pound investors will be looking towards the Gfk consumer confidence for March which is expected to remain in contraction due to lockdown restrictions in the UK, which could add pressure to Sterling.
Over the weekend New Zealand’s own consumer confidence for Q1 is forecast to have fallen to 99 points from 106, which could cause renewed concerns for New Zealand’s economy following the disappointing GDP data today.
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