GBP/NZD surges on New Zealand’s coalition news
Philip McHugh October 19th 2017 - 2 minute read
The UK’s latest employment numbers lent the pound little support on Wednesday, while political developments in New Zealand saw NZD tumble by over 1.5% against the majority of its counterparts.
GBP/EUR is currently trading in the region of €1.1168, GBP/USD is trending just below $1.3200, GBP/AUD is down -0.4% to AU$1.6775 but GBP/NZD has jumped 1.5% to NZ$1.8769.
What’s been going on in the currency market? Read on to find out…
What’s been happening?
The pound came under further pressure on Wednesday as the UK’s latest employment figures confirmed that wage growth is lagging seriously behind inflation.
The intensification of the wage squeeze may prompt the Bank of England (BoE) to reconsider whether the UK is ready for a rate hike, and the pound softened accordingly.
The Guardian’s economics editor had this to say of the release; ‘It will be well into 2018 before pay growth overtakes inflation – and this relentless squeeze on living standards will have retailers nervous as the key Christmas period nears. Consumers face a choice: tighten their belts or get deeper into debt.’
During the Australasian session the GBP/AUD exchange rate lost ground as the Australian dollar broadly strengthened in response to the latest Australian employment figures.
The nation added more positions than forecast in September, resulting in an unexpected decline in the Australian unemployment rate from 5.6% to 5.5%.
Figures for August were negatively revised, but the Australian dollar still managed to advance by over 0.3% against the pound and US dollar.
Meanwhile, the New Zealand dollar plummeted as Winston Peters, leader of NZ First, chose to form a coalition with Labour a full month after the nation’s election took place.
GBP/NZD leapt by 1.5% after the announcement.
What’s coming up?
With more high-profile UK data on the horizon today, further GBP exchange rate movement is likely.
The UK’s retail sales report is expected to show a -0.2% decline in consumer spending in September month-on-month, which would take the annual figure from 2.8% to 2.2%.
Such a result may send the pound lower in the hours ahead.
The only other data likely to inspire market movement today is the US initial jobless and continuing claims figures.
The fallout from the latest political developments in New Zealand is likely to continue driving New Zealand dollar exchange rates heading into the weekend.