Pound-New Zealand Dollar could stay under pressure if UK retail sales disappoint, while firmer risk appetite may keep the Kiwi supported.
The Pound New Zealand Dollar (GBP/NZD) exchange rate stumbled on Thursday as the Bank of England (BoE) left interest rates unchanged.
At the time of writing, GBP/NZD traded at NZ$2.3302, down 0.5% on the day.
Pound to New Zealand Dollar (GBP/NZD): 2.32993 (-0.43%)
Euro to New Zealand Dollar (EUR/NZD): 2.002278 (-0.16%)
New Zealand Dollar to Dollar (NZD/USD): 0.573229 (+0.23%)
DAILY RECAP:
The New Zealand Dollar (NZD) strengthened during Thursday’s Asian trading session, recouping some of the losses it suffered on Wednesday evening, thanks in part to better-than-expected GDP figures.
New Zealand’s GDP growth rate for the second quarter printed at 0.2%, beating forecasts for 0.1%. First-quarter growth was also revised higher, from 0.8% to 0.9%.
While the data still showed a sharp slowdown in growth, NZD investors were heartened by the stronger-than-expected performance in the New Zealand economy.
Additionally, an improving mood lent the risk-sensitive ‘Kiwi’ some support.
Meanwhile, the Pound (GBP) was initially muted as GBP investors braced for the Bank of England’s interest rate decision.
Sterling then stumbled as the BoE held interest rates. While no change in policy was broadly expected, there had been the outside chance of a hike. In addition, the Monetary Policy Committee (MPC) remained split 6-3 in favour of holding rates, matching the previous meeting’s vote split.
GBP exchange rates struggled in the wake of the decision, particularly against the rallying New Zealand Dollar.
Near-Term GBP/NZD Forecast: Contracting UK Sales to Dent Sterling?
Looking ahead, the UK’s latest retail sales figures could influence the Pound at the end of the week.
Markets expect to see a 0.2% contraction in sales growth in August, following a 0.5% contraction in July. If the data meets forecasts, the decline in consumer spending could raise concerns about the health of the UK economy and thereby weigh on GBP.
Meanwhile, New Zealand data is thin on the ground. As a result, risk sentiment could drive NZD movement, with any shifts in the market mood potentially infusing the ‘Kiwi’ with volatility.
Our currency coverage draws on live market data, official economic releases and published bank research.
