Looking ahead to this week, tomorrow’s Bank of England minutes could prove market-moving, particularly if they suggest that a further loosening of the UK’s monetary policy is on the cards.
Foreign Currency Market Update – GBP / NZD Update
Sterling has staged a renaissance against the New Zealand Dollar over the past week, sending the GBP NZD exchange rate up to 1.9430 during yesterday’s trading session. This represented the pair’s highest rate this month. The Pound to Kiwi Dollar exchange rate has benefitted from the soft tone of recent global data releases, with Chinese figures towards the end of last week’s session providing particular cause for concern. Last Thursday morning’s Chinese Industrial Production numbers for last month showed that output in Asia’s leading economy had contracted for the third month on the trot, suggesting that the recent slow-down in China’s economy is yet to bottom-out. The news out of China got worse in the early hours of Friday morning, with the release of the latest set of domestic trade numbers which showed a worrying decline in the levels of domestic imports and exports.
This week’s session began with a whimper for the NZD with the release of severely disappointing Japanese Q2 GDP growth numbers, which saw institutional investors shift out of risk-sensitive commodity-driven currencies including the Kiwi Dollar, which remains particularly susceptible to weak South East Asian data.
Looking ahead to this week, tomorrow’s Bank of England minutes could prove market-moving, particularly if they suggest that a further loosening of the UK’s monetary policy is on the cards. Meanwhile, the relative strength of the New Zealand Dollar this week is likely to be determined largely by comments from eurozone officials and the knock-on effect that these words have on global appetite for risk. With the German policy-maker Michael Fuchs stating yesterday that the Teutonic state will demand deeper austerity measures from Greece before providing her with additional bail-out funding, the future direction of the Kiwi remains uncertain.
Summary of major upcoming data releases that we think may move the market.
- Price action for GBP NZD during last week’s session was dictated by two data releases on opposite sides of the world
- 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
- Sterling has continued its march forward against the Kiwi Dollar in recent sessions
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- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Kiwi surges 8% in four weeks