The GBP NZD exchange rate could head back down towards mid-February’s near-term low of 1.8634.
Foreign Currency Market Update – GBP / NZD Update
In the absence of any tier one New Zealand data releases, the New Zealand Dollar traded within a tight trading range against the Pound during last week’s session. The GBP NZD exchange rate began the week trading in the mid-1.9300s and by the end of the week, had improved only slightly to touch 1.9581 just before Friday evening’s market close. For a pair which has exhibited considerable volatility in recent years, this was an unusually stable week.
Support for the Kiwi Dollar eased during the early part of the week following data released in China which revealed that industrial profits had shown a monthly drop in February for the first time in some three years. This caused global appetite for risk to wane, hurting the risk-sensitive NZD. However, the gentle move forward in the GBP NZD exchange rate was soon stopped in its tracks, when Wednesday morning’s finalised UK GDP growth figures revealed that Britain’s fragile economy had contracted by 0.3% in the final three months of 2011 – this was more than had been previously estimated.
Wednesday afternoon brought the release of February’s Durable Goods Orders data in the US. The figures showed lower than anticipated levels of orders by American business for products expected to last at least three years, stoking fears about future activity levels in the world’s leading economy. The numbers knocked the stuffing out of institutional investors’ appetite for risk, causing a shift out of New Zealand Dollar-denominated assets. This provided a fair wind for the GBP NZD exchange rate as the week drew to a close.
This week saw GBP NZD open at a lower exchange rate, when Asian trading re-commenced last night. This would ordinarily be seen as a negative indicator for a currency pair, however the ‘price gap’ was quickly closed, cancelling out this signal. Thursday afternoon brings the potential for considerable price action for GBP NZD, with the Bank of England’s monetary policy announcement and the release of the closely-watched NIESR GDP estimate for March. If the Bank votes for further Quantitative Easing and the growth estimate points to a double-dip recession for Britain, then the GBP NZD exchange rate could head back down towards mid-February’s near-term low of 1.8634.
Summary of major upcoming data releases that we think may move the market.
- Pound Sterling, the Euro and US Dollar exchange rate news – The Pound remained in a tight trading range against both the Euro and the U.S Dollar
- The GBP NZD rate has spent the last two weeks range-trading between resistance at 1.9400
- Pound, Euro US Dollar Currency Forecast – The Euro traded higher against the Dollar over the Easter weekend
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast
- Sterling Euro US Dollar Foreign Currency Forecast – The Pound briefly traded up towards 1.1400 on interbank against the Euro