The GBP NZD’s major downtrend continues. This move was instigated in October 2008, when appetite for risk drained from global markets, in the wake of the credit crisis.
Foreign Currency Market Update – GBP / NZD Update
The New Zealand Dollar once again performed strongly in the currency markets last week, sending the GBP NZD exchange rate to a new 6-month low of 1.8851 during Friday’s session. The pair has been on the slide since the middle part of December, with the chart showing the highs getting lower whilst the new near-term lows are getting lower as well. As yet, GBP NZD has avoided making a convincing run at last August’s multi-decade low of 1.8546, but whilst the pair continues to trade below 1.9000, this key interim floor remains within view.
Last week’s session was notable for the absence of tier one New Zealand data. There were more releases of interest in the UK, with mid-week Mortgage Approval data and the latest Nationwide House Price survey, both of which disappointed. Friday’s UK PMI Services sector survey provided some grounds for optimism, printing at 56.0 – far better than analysts’ expectations of 53.3. This showed that Britain’s key services sector is expanding at its quickest rate since last Spring. Perhaps the most beneficial data for the Kiwi Dollar came on Friday, with the release of this month’s Non-Farm Payroll figure in the US. The figure showed that 243,000 new jobs were created in the world’s largest economy last month, causing a surge in global appetite for risk, which helped the high-yielding currencies, including the NZD.
*Denotes the importance of the data item *** being the highest level.
** Thursday morning sees the release of the latest UK Industrial and Manufacturing Production figures. Industrial Production figures are expected to show an annualised contraction of 3.1%, while analysts expect the Manufacturing Production data to show a return to growth for the sector, following November’s negative figure.
** Thursday morning also sees the release of December’s UK Visible Trade Balance numbers. A deficit of some £8.6bn is expected.
*** The key UK risk event this week comes at lunchtime Thursday, when the Bank of England Monetary Policy Committee announces its interest rate/asset purchase scheme decision. An upping of the current £275bn allocated by the Bank to its QE programme would be likely to damage the Pound.
** The closely-watched NIESR GDP Estimate for the UK is released on Thursday afternoon. If the monthly figure for January beats December’s counterpart number of 0.1%, then Sterling will be supported.
** Wednesday evening sees the release of New Zealand Q4 Employment data is expected to show a firming-up of the Kiwi labour market.
** Thursday night’s NZ Card Spending data for January is expected to show an improvement from December’s figure, which showed a contraction of 0.2%.
The GBP NZD’s major downtrend continues. This move was instigated in October 2008, when appetite for risk drained from global markets, in the wake of the credit crisis. The pair traded as high as 2.9875 at this time and has been on the slide since. Last August’s low of 1.8546 represents the bottom of the last test lower. If risk sentiment remains buoyant during this week’s session, then a renewed run at this significant support looks highly possible. A break below this level would send out a highly negative signal for GBP NZD. Clients needing to buy Kiwi Dollars in the short-term will be hoping for the continued absence of a debt agreement between Greece and its creditors. Such a scenario could see the pair settle back above the 1.9000 level, for the time-being at least.
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