Whether or not the Pound to New Zealand Dollar (GBP/NZD) exchange rate will trend lower this week largely depends on central bank developments.
Overnight New Zealand’s Credit Card Spending data for June showed a 0.7% month-on-month increase (following a positively revised 3.2% gain in May) and a 7.0% year-on-year rise in credit card spending.
The data had only a limited impact on the ‘Kiwi’s appeal with investors being far more focused on Wednesday’s big developments.
While the Reserve Bank of New Zealand is scheduled to deliver its interest rate decision on Wednesday, the Bank of England will also be publishing minutes from its latest policy meeting.
The fact that the RBNZ is largely expected to announce a further interest rate increase, taking the benchmark rate from 3.25% to 3.5%, is keeping the New Zealand Dollar supported against the majority of its most traded currency counterparts.
Although recent inflation figures for New Zealand came in below forecast levels – and despite the fact that the price of dairy produce (New Zealand’s main export) is sliding – the RBNZ is likely to increase interest rates for a fourth time this week.
If that proves to be the case the New Zealand Dollar could climb, although upward momentum may be limited if the central bank infers that this will be the year’s last rate increase.
In the view of some economists, the current economic situation in New Zealand could see the RBNZ putting further rate hikes on hold for the next few months.
According to currency strategist Raiko Shareef; ‘there is still some reluctance for Kiwi to go lower [but] our expectation is that they will strongly signal that everything from here on out, after this hike in July, will be very, very data dependent and for us the risk is that December might not be a hike after all.’
The Pound to New Zealand Dollar (GBP/NZD) exchange rate could also edge higher depending on the content of the BoE meeting minutes.
The minutes may show that one or more members of the Monetary Policy Committee voted in favour of increasing interest rates at the July gathering.
A sign that the divide on interest rate policy is growing could give the Pound the boost it needs to test fresh highs against currency counterparts like the Euro and US Dollar.
In the week ahead other news which may impact the Pound to New Zealand Dollar (GBP/NZD) exchange rate includes a speech given by RBNZ Deputy Governor Grant Spencer, New Zealand’s trade balance figures, the UK’s retail sales data and the UK growth report for the second quarter.
New Zealand Dollar (NZD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
New Zealand Dollar,
,US Dollar,0.8697,
New Zealand Dollar,,Euro,0.6427,
New Zealand Dollar,,Australian Dollar,0.9268,
New Zealand Dollar,,Pound Sterling,0.5089,
US Dollar,,New Zealand Dollar,1.1505,
Euro,,New Zealand Dollar,1.5532,
Australian Dollar,,New Zealand Dollar,1.0784,
Pound Sterling,,New Zealand Dollar, 1.9629,
[/table]
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