Daily GBP/NZD News: Pound to New Zealand Dollar Exchange Rate Drops on CBI Sales Data

July 25, 2018 – Written by Tim Boyer

Tuesday’s GBP/NZD trading saw the Pound open in the region of NZ$ 1.9320 and closed slightly higher at a level of NZ$ 1.9328.

This wasn’t the sum total of daily trading – the Pound to New Zealand Dollar exchange rate fluctuated significantly from the morning to the evening.

Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Declines on Concerning UK Retail Stats

The Pound (GBP) has made minor losses against the New Zealand Dollar (NZD) today; the GBP/NZD exchange rate has notably been volatile since the start of daily trading.

The Pound’s decline in this instance is down to the latest UK economic data, a Confederation of British Industry (CBI) distributive trades reading.

On the plus side, this measure of UK retail activity showed a better-than-expected shift from 32 points to 20, instead of 15 as forecast.

On the downside, however, CBI analysts estimated that the result was seasonal and not indicative of long-term economic strength.

Considering the implications of the results, CBI Principal Economist Alpesh Paleja said:

’While the heatwave has boosted retail sales in recent months, we may be seeing some early signs of a cooling off, with orders falling in the year to July and retailers expecting no growth in sales next month.

‘Indeed, the long-term challenges facing the retail sector are significant. Continually subdued real wage growth means that households are still feeling the pinch, and retailers are still grappling with deeper structural issues, such as digital disruption.’

Other factors lowering Pound Sterling demand today have been remarks from former Bank of England (BoE) policymaker Andrew Sentance.

Warning against the effects of the ongoing Brexit process on the UK economy, Mr Sentance said:

‘The unemployment rate remains at 4.2%, but reductions in unemployment have slowed sharply over the past couple of years.

‘Meanwhile, inflation remains above the Bank of England’s target at 2.4%, only just above wage growth.

‘We will continue to be in an uncomfortable position in the UK economy for a while yet, as uncertainty about the Brexit outcome persists, and possibly intensifies.’

New Zealand Dollar to Pound (NZD/GBP) Exchange Rate Rises as US Dollar Drops

The New Zealand Dollar (NZD) has been able to make a recent advance against the Pound (GBP), following the decline in the value of the US Dollar (USD).

US Dollar trader confidence has dropped off recently, ahead of a key meeting between US President Donald Trump and European Commission President Jean-Claude Juncker.

This decline has raised risk sentiment and made currencies like the New Zealand Dollar more attractive, which accounts for the latest NZD-GBP exchange rate rise.

Earlier NZ economic news proved less supportive, with Tuesday evening’s NZ trade balance reading for June showing a surprise shift from growth to contraction.

Moving from NZ$ 208m to NZ$ -113m, this was considered the widest deficit in a June year in a decade.

A deficit is bad news for NZ traders, as it means that more goods are being imported into the country than exported. Prolonged trade deficits can imply a reliance on overseas goods, eventually causing negative effects like job losses.

Future Pound to New Zealand Dollar Exchange Rate Forecast: Can GBP/NZD Recover on Lower NZ Confidence?

The Pound (GBP) has a chance to regain lost ground in trading against the New Zealand Dollar (NZD) late on Thursday, when an NZ consumer confidence reading comes out.

The ANZ Roy Morgan consumer confidence figure for July is predicted to show a slight decline in sentiment levels, from 120 points to 119.

While minimal, such a decline could still rattle NZD traders and cause a decline against the Pound.

Business confidence in New Zealand has been poor since a change of government last year and if it looks like consumer confidence is also falling then the New Zealand Dollar could drop.

Getting back to the Pound, Sterling may slide against the New Zealand Dollar on the coming Tuesday if a GfK consumer confidence reading shows an as-forecast worsening from -9 points to -10.

GBP/NZD losses might be limited late on Tuesday, however, as the Q2 NZ unemployment rate is expected to show a potentially damaging rise from 4.4% to 4.5%.

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TAGS: Pound New Zealand Dollar Forecasts