In the aftermath of the publication of the minutes from the Federal Reserve’s most recent policy meeting the US Dollar has softened considerably. This, in turn, has caused increased market volatility and risk-sensitive currencies such as the ‘Kiwi’ (NZD) have appreciated. Sterling, meanwhile, has generally declined against the majority of its most traded currency peers as traders await the Bank of England rate decision.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0403.
Those invested in the New Zealand Dollar have watched the South Pacific currency generally depreciate across the board in recent weeks for a number of reasons.
‘Kiwi’ declination was initiated by the Reserve Bank of New Zealand opting to hold the bank rate for the foreseeable future. Issues regarding the depreciation of global dairy prices have also weighed heavily.
Perhaps the biggest stumbling block in terms of ‘Kiwi’ recovery was a bullish US Dollar. As traders made positive bets on the Federal Reserve tightening monetary policy in the near-future, the US Dollar surged up the charts despite economic data not necessarily warranting the high position.
Sterling has struggled this week against comments made by UK officials regarding currency overvaluation.
Bank of England Deputy Governor Ben Broadbent initiated concerns when he suggested that a rate increase could not occur until inflationary issues were addressed. The newest BoE policy maker Kristin Forbes echoed this opinion, stating that inflation was hampering economic growth.
Business Secretary Vince Cable compounded Sterling losses after suggesting that the inflationary pressures were the result of Pound overvaluation by around 10-15%.
The Pound Sterling to New Zealand Dollar exchange rate has fallen to a low today of 2.0322.
Towards the end of Wednesday New Zealand data printed fairly negatively. Whilst the Truckometer Heavy advanced, Card Spending and Card Spending Retail declined from the previous scores.
This, however, wasn’t enough to overshadow the influx of demand following the softening US Dollar. The Fed meeting minutes outlined concerns over slow foreign economic growth and a massively overvalued US Dollar. Policymakers asked for patience regarding a benchmark rate increase.
Sterling has declined against the majority of its rivals as traders await the Bank of England interest rate decision. A decline in House Price Balance has also aided the Sterling downtrend.
Forecast for the Pound to New Zealand Dollar Exchange Rate
Although there is a lack of influential, market moving data pertaining to New Zealand on Friday; there is the possibility of volatility with several Chinese data publications.
British Trade Balance data will be of interest to those invested in the Pound and is more likely to influence volatility than the BoE rate decision which is widely regarded to remain unchanged.
The Pound Sterling to New Zealand Dollar exchange rate has reached a high today of 2.0665.
UPDATE
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 2.0495.
A report from the International Monetary Fund on Friday has seen Thursday’s trader risk appetite diminish considerably. The report warned that a prolonged period of ultra-low interest rates poses the threat of a fresh financial crisis by encouraging excessive risk taking on global markets.
José Viñals, the IMF’s financial counsellor, said: ‘Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges.’
The New Zealand Dollar, as a risk-correlated currency, has taken a hit from the report as traders invest in safe-haven assets.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound,
,US Dollar,1.6208,
Pound,,Euro,1.2692,
Pound,,New Zealand Dollar,2.0407,
Pound,,Australian Dollar,1.8279,
[/table]
