The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate eased from its strongest level since September 2009 on Thursday due to dovish comments from the US Federal Reserve boosting demand for riskier assets.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trading in a range of 2.2865 to 2.3030
Early in the Asian session the Pound Sterling had been trading higher against the New Zealand Dollar due to the release of disappointing domestic GDP data. The poor report increased economist expectations that the Reserve Bank of New Zealand (RBNZ) will choose to make another interest rate cut in the coming quarter. Some are predicting that the bank could make another 25 basis point rate cut to 3%.
The data released by Statistics New Zealand showed that the nation’s Gross Domestic Product (GDP) increased by just 0.2% in the first quarter of the year, well below economist expectations for an increase to 0.6% and down from the 0.8% rise previously recorded. On an annual basis the nation’s economy grew by 2.6%, below forecasts for a figure of 3% and down on the previous figure of 3.5%.
The main cause for the soft figure was a fall in global dairy prices and lower agricultural output.
In European trading, the New Zealand Dollar rallied along with other riskier commodity and emerging-assets, as the US Federal Reserve delivered a dovish policy statement. The dovish tone caused investors to raise their bets that a US interest rate hike will not occur in September.
The Federal Reserve left interest rates unchanged, as expected, but policymakers sharply lowered their growth and inflation estimates. Fed Chair, Janet Yellen also said that she wants to see ‘more decisive evidence’ that the world’s largest economy is growing strongly before an interest rate rise will be warranted.
Pound Sterling (GBP) Exchange Rate Supported By UK Retail Sales Gain
The Pound , meanwhile, was supported against is peers after data released by the London based Office for National Statistics (ONS) showed that retail sales gained by 0.2% in May rather than falling the -0.2% anticipated.
The Pound Sterling to New Zealand Dollar exchange rate could recover ground if upcoming US Inflation data supports the ‘Greenback’ and softens demand for commodity and emerging market assets.
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