April 29, 2021 - Written by John Cameron
STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises: Sterling Benefits from Increasing UK Job Vacancies
GBP/NZD Exchange Rate Heads Higher on Upbeat UK Market Mood
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose today as UK economic optimism has lifted on increasing job vacancies. The pairing is currently fluctuating around NZ$1.92.
As a result, the Pound has benefited from rising confidence in the outlook for the UK economy.
The Office for National Statistics (ONS) reported a rise in online job vacancies, which have hit their highest level since the beginning of the pandemic.
The ONS said:
‘The volume of UK online job adverts was at 103% of its average February 2020 level on 23 April 2021; this is an increase of 4 percentage points from the previous week and the first time it has exceeded its February 2020 average level since 6 March 2020.’
Goldman Sachs has also predicted that the UK economy will grow farther than the United States.
Goldman chief European economist Sven Jari Stehn commented:
‘Covid case growth has remained low and the vaccine roll-out has surged ahead, with half of the population vaccinated. We therefore see the government’s reopening plans as on track, with phase 3 to start on May 17.’
We could see the Pound New Zealand Dollar (GBP/NZD) exchange rate head higher this week if the confidence in the UK economy continues to grow.
New Zealand Dollar (NZD) Struggles Despite Growing Confidence in Global Economy
The New Zealand Dollar (NZD) failed to gain today despite growing confidence in the US economy. US GDP rose by 6.4% in the first quarter, buoying confidence in global risk sentiment.
New Zealand’s Covid-19 vaccination uptake continues to lag behind other countries’ rates, leaving some ‘Kiwi’ traders more cautious about the outlook for the nation’s economy.
In New Zealand economic data, today saw the release of the latest ANZ business confidence report for April, which beat forecasts but remained in negative territory at -2.
ANZ activity outlook for April, however, improved by 22.2%.
The financial services company commented on the data:
‘Given supply-side constraints are biting so hard, the confidence and robust employment intentions of firms may represent greater upside to wages and prices than to actual growth. It’s looking like a pretty inflationary soup. The RBNZ will be keen to look through cost-push inflation as far as possible, because it’s temporary…. But there’s clearly plenty of demand and risk-taking out there. The notion that the RBNZ might be overcooking things may well gain some traction in the months ahead, especially with headline inflation expected to rise above 2% in mid-2021.’
GBP/NZD Exchange Rate Outlook: Could Souring Risk Sentiment Drag on the New Zealand Dollar?
The New Zealand Dollar (NZD) will continue to remain sensitive to risk sentiment this week. Any signs of rising cases of Covid-19 in India and Japan would limit the appeal of the risk-correlated ‘Kiwi’.
Also, if tensions between China and Australia continue to rise, then this would also drag on the New Zealand Dollar. China is New Zealand’s largest trading partner.
The Pound New Zealand Dollar (GBP/NZD) exchange rate could head higher this week, however, if confidence in the UK economy continues to improve.
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