The pounds to New Zealand dollars interbank exchange rate has hit 1.9438 today, its highest in over 1 week, or since April 3rd.
A big factor why sterling has reached this 1-week high versus the kiwi dollar is because New Zealand's economy has showed signs of cooling, with retail sales, business activity and house prices all lower recently.
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Let's look more closely at the factors that have contributed to lift the pounds to New Zealand dollars rate.
New Zealand Electronic Card Retail Sales Fall in March
A first reason why the pound has touched this 1-week high versus the New Zealand dollar is because New Zealand's electronic card retail sales fell in March, said official data yesterday, reports Interest.co.nz.
According to Statistics New Zealand (SNZ) on Thursday, electronic card retail sales in the Land of Middle Earth fell by -0.3% last month. This is below financial market forecasts for a +0.7% gain, as well as February's increase of +0.6%.
SNZ said that electronic card sales fell in all sectors outside of hospitality, services and petrol in March. This could slow New Zealand's economic growth in Q1 2019, so has helped lift the pounds to New Zealand dollars rate.
NZ Business Activity Drops to 8-Month Low in March
In addition, another explanation why sterling has hit this 1-week high versus the kiwi dollar is because New Zealand's business activity dropped to an 8-month low in March, said trusted data yesterday, reports news website Scoop.co.nz.
According to Business NZ's monthly Purchasing Manager's Index (PMI) of kiwi business activity, output fell to 51.9 last month. This is the lowest figure in 8 months, since July 2018, and far below economists' predictions of 54.4.
In particular, new orders, production and deliveries of raw materials all increased below their historical average in March, said Business NZ.
Business NZ's senior economist Craig Ebert said about these figures that New Zealand was experiencing "a rocky patch in cross-border trade and a reservation regarding investment – all aggravated by unresolved 'trade tensions'".
This too suggests that New Zealand's Gross Domestic Product (GDP) growth could slow in early 2019, so has contributed to lift the pounds to New Zealand dollars exchange rate.
Auckland Home Sales Decline by -18% in March
Also, a further factor why the pound has reached this 1-week high versus the kiwi dollar is because home sales in New Zealand's capital city, Auckland, fell -18% in March compared to a year ago, reports online newspaper Stuff.co.nz.
According to the Real Estate Institute of New Zealand (REINZ) yesterday, property sales in Auckland fell by -18% last month compared to March 2018, to just 2006 sales. Meanwhile, home sales across all of New Zealand dropped to an 8-year low.
New Zealand economics watchdog Infometrics says this is because "potential buyers [are] paralysed by fears over future government interventions and changes to investment incentives." In particular, it's thought that New Zealand's government could soon introduce a Capital Gains Tax (CGC) on property sales.
These falling home sales will weigh on New Zealand's property prices, in turn making New Zealand home owners feel less rich. This could encourage New Zealanders to spend less, thus slowing down New Zealand's economic growth. As a result, this has helped boost the pounds to New Zealand dollars rate also.
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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email email@example.com.