GBP NZD has begun this week with a whimper rather than a bang.
Foreign Currency Market Update – GBP / NZD Update
Last week’s session proved to be a highly significant one for the GBP NZD exchange rate, as the pair broke to its highest level since the first week of April of last year. Wednesday’s upward move to 2.1056 just managed to beat the existing 2012 high of 2.1014, which had come only five days earlier, as well as last November’s high of 2.1050. A failure to eclipse these key interim levels would have sounded a negative indicator for GBP NZD.
The upward break for the pair was once again driven by selling pressure on the Kiwi Dollar as global appetite for risk ebbed. The mid-week move out of riskier asset classes was precipitated by concerns that the eurozone is unravelling, as the latest Brussels summit between European leaders culminated in an unseemly argument between German Chancellor Angela Merkel and France’s new Socialist President Francois Holland on whether the introduction of an ECB-backed whole-of-eurozone bonds would provide a panacea to the region’s ongoing debt crisis. France said ‘oui’, while Germany issued a firm ‘nein danke’; the countries’ respective positions appear intractable, spelling bad news for the rest of Europe.
However, the mid-week gains for GBP NZD proved short-lived and the pair was trading back in the 2.07s by close of play on Friday. The move lower was caused by weaker than anticipated UK Retail Sales figures, released on Wednesday, and by Thursday’s British GDP growth numbers for Q1, which saw a downward revision of the initial official estimate. It appears that the UK’s double-dip recession is worse than had previously been feared – a fact which may weigh heavily on the Pound in the short-to-medium term.
GBP NZD has begun this week with a whimper rather than a bang, which has seen it trade down into the mid-2.05s by the half way point of today’s European session. With news emerging over the weekend that China is set to allow private individuals and companies to invest in its banking sector for the first time, risk has been firmly back on the menu since global equities markets re-opened last night. This means that the strong rejection of last Wednesday’s thirteen and a half month high for GBP NZD could prove a turning point for this pair, so clients needing to purchase Kiwi Dollars in the near-term may wish to consider taking care of at least half of their requirement, sooner rather than later, in order to mitigate the potential for further losses.
Summary of major upcoming data releases that we think may move the market.
- The GBP NZD exchange rate jumped to 1.9673 during last week’s session
- The GBP CAD exchange rate steadily lost ground throughout last week’s session
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Sterling looks highly vulnerable based on interest rates
- The GBP NZD rate has spent the last two weeks range-trading between resistance at 1.9400
- Price action for GBP NZD during last week’s session was dictated by two data releases on opposite sides of the world