- Investment intentions among business owners in NZ declined 9 points to 17.4%.
- Exports from New Zealand declined 5% to close at +7.6%.
- Britain looks to join the CPTPP Agreement valued at £9 trillion.
The GBPNZD pair gained 0.43% as of 2:18 am GMT on August 2, 2021. It added 1.27% in the previous 7-day average buoyed by the weakening New Zealand dollar and hit a high of 1.9973. The NZD is yet to recover after going down 3 points in the business confidence outlook by ANZ. Own activity of NZ firms slowed to 26.3% from a previous record of 31.6%.
The kiwi started the week on a low note, trading at -0.50% against the Aussie, -0.05% against the USD and -0.21% against the Canadian dollar in the Asian session.
Slim business outlook in New Zealand
Investment intentions among business owners in NZ declined 9 points to stand at 17.4%. Capacity utilization also lowered to 19.2% (-5% points).
Figure 1: Business Confidence Index outlook in New Zealand
However, CPI is expected to rise by at least 2 points, with employment intentions soaring to 21.4% (+1%). Export declined 5% to close at 7.6%. This decrease was fundamental since 60% of New Zealand’s economic activity comprises international trade.
Property boom to the rescue
On a positive note, the year ended June 2021 saw a record-breaking consent number for new homes in NZ at 44,299, growing 3.8%. The number of new homes had risen for the fourth month in a row after it first jumped to 41,028 in March 2021.
Figure 2: New Homes Consent in NZ since 1966
However, this growth was mostly seen in Auckland, with most consents seen in multi-unit homes compared to single-unit homes. The consented homes included townhouses and apartments. June 2021 saw a 28% increase in the multi-unit home consents to 19,777 (YoY). There was an 11% rise in the novel stand-alone houses in the same period, totalling 24,522.
Intention to put up residential constructions increased 2% to 42% while intentions for commercial constructions declined 15% to 24%. (net).
While June 2021 saw the total home transfers rise 69.49% (YoY) from 26,265 to 44,517, it still showed a decrease from 51,505 hits in January 2021.
The UK opening trade deadlock with New Zealand
Britain is on the verge of winning membership in the trans-Pacific free trade area (CPTPP), valued at £9 trillion. The Agreement includes having trade partners with New Zealand, Singapore, Mexico, Peru, Japan, etc. This inclusion means a new market for British exports, as stated by UK Trade Secretary Liz Truss.
The British pound’s lead was cut to 0.31% against the NZD after UK’s July 2021 Manufacturing PMI declined to 60.4 from a previous reading of 63.9. It had met consensus estimates but still showed a decrease in new factory orders in the month.
Figure 3: UK Manufacturing PMI
Above 50, the PMI still shows expansion through July 2021, albeit a decline in new orders. post-Brexit logistical delays led to a stretch in supply periods, lengthening the lead time at the ports. The demand for UK products outstripped supply, with about 72% of manufacturers experiencing an increase in average input costs.
The GBPNZD approaches the resistance at 2.0000, testing the price several times and forming a narrow consolidation right below the level. The breakout of 2.0000 may send the price to 2.0200 in a matter of days.
At 1.9939, the price is trending above the 9-day EMA, which is at 1.9857. There is an increase in the buying volume, with the 14-day RSI moving towards the overbought zone at 62.50. Price may trade in the range of 1.9626 to 2.0145.