The pair had ended last week at 1.9752, but the sentiment shift over the weekend saw GBP NZD open considerably higher at 1.9833.
Foreign Currency Market Update – GBP / NZD Update
The Pound has enjoyed a positive start to this week’s session against the New Zealand Dollar. This has seen the GBP NZD exchange rate break to 1.9963 in early trading today, its highest level since the middle part of June. The currency markets are closed for trading between Friday evening and Sunday night every week, meaning that there are no price fluctuations during this period. However, the most recent weekend close proved to be a highly positive fallow period for GBP NZD, as investors used the ‘downtime’ to digest Friday’s comments from Federal Reserve Chairman Ben Bernanke and Saturday morning’s Chinese manufacturing data. The Chinese number s were particularly bad news for the New Zealand tender, showing that activity in the giant Asian economy’s manufacturing base contracted by considerably more than anticipated last month. This is the latest in a string of disappointing Chinese releases, providing considerable cause for concern for the Kiwi economy, given its dependence on China’s massive export market.
As last week’s session drew to a close, Fed Chairman Ben Bernanke got to his feet to deliver a set-piece speech at the annual Jackson Hole central banker’s symposium. Investors were listening closely to Bernanke’s comments for hints that there would be further Quantitative Easing to come in the near-term for the US economy – a development which would be highly favourable to risk-sensitive currencies like the New Zealand Dollar. The fact that Bernanke did not make such an announcement and instead chose to concentrate on the bleak prospects for the US economy meant that risk was well and truly off the menu when the currency markets re-opened on Sunday night.
The pair had ended last week at 1.9752, but the sentiment shift over the weekend saw GBP NZD open considerably higher at 1.9833. If the Bank of England opts to maintain its current monetary policy stance at Thursday’s MPC meeting, then the forward move for GBP NZD could gain renewed momentum. However, if four other members of the Bank’s nine-man monetary policy committee share Martin Weale’s view, which he expressed last week, that a near-term cut in UK interest rates might be desirable, then Sterling could rapidly give back the gains which it has made against the Kiwi Dollar over the past month.
Summary of major upcoming data releases that we think may move the market.
- The Rand is moving forward once again at the start of this week’s session
- The Australian Dollar came under pronounced selling pressure at the start of last week’s session
- Pound to New Zealand Dollar Exchange Rate Forecast: A light schedule of domestic data releases during last week’s session failed to hold back the New Zealand Dollar
- Pound to South African Rand Exchange Rate Forecast: The South African Rand was under pressure at the start of last week’s session
- Weaker than anticipated New Zealand labour market figures, released in the middle part of last week’s session, caused pronounced selling pressure on the Kiwi Dollar.