The British Pound to New Zealand Dollar (GBP/NZD) exchange rate advanced early in Wednesday’s European session despite a 1% rise in Fronterra’s latest dairy auction.
After falling by around 50% last year, any slight increase is a welcome change for New Zealand farmers.
However, investors are anticipating an exciting day for the Pound with Unemployment Rate figures and Bank of England meeting minutes out for release.
The British Pound to New Zealand Dollar (GBP/NZD) exchange rate advanced early in Tuesday’s European session as investors hedged their bets for favourable wage and unemployment data on Wednesday.
At present, the UK Unemployment Rate is forecast to decline from 6.0% to 5.9% in the three months through November; while Employment Change is forecast to show 74K new jobs created. Perhaps most excitingly, Average Weekly Earnings is expected to grow from 1.4% to 1.7% in the same time period.
Wednesday could be a highly influential day for the British Pound to New Zealand Dollar (GBP/NZD) exchange rate with the Bank of England’s (BoE) meeting minutes scheduled for release.
If two of the nine Monetary Policy Committee (MPC) members voted in favour of rate hikes in the last meeting, the British Pound could be offered some additional support.
Wednesday is also going to be highly influential for the ‘Kiwi’ with New Zealand’s Consumer Price Index due out. An annual slip in inflation in the fourth quarter from 1.0% to 0.9% has been projected.
Fronterra Dairy Auction Could Offer New Zealand Dollar Exchange Rate Stability
However, the Fronterra dairy auction could make Tuesday an interesting day for the New Zealand Dollar. The last two auctions have seen dairy prices make a slight recovery after falling by around 50% last year.
With certain areas such as South Canterbury and North Otago being monitored for droughts, the commodity may be a little more popular.
Westpac stated: ‘An emerging NZ drought of uncertain severity may produce extra demand at auction and this supports prices.’
In addition, New Zealand farmers felt the effect of a higher ‘Kiwi’ exchange rate with the New Zealand Dollar to US Dollar (NZD/USD) exchange rate hitting a three-year high last July. The ‘Kiwi’ has since slid by around 11.8% but the fall in dairy prices has still had a drastic impact on farmers.
ANZ recently lowered forecasts for famers’ payouts from June 2015 to June 2016.
ANZ economist Con Williams stated: ‘A more modest recovery in dairy prices, combined with a strong New Zealand Dollar is weighing on the outlook. At this stage we suspect the recovery will be gradual through the first half of 2015 and gather more momentum in the second half of the year.’
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
The upcoming Fronterra dairy auction is likely to have a large impact on the New Zealand Dollar to British Pound (NZD/GBP) exchange rate on Tuesday. Any increase in prices could encourage the ‘Kiwi’ higher.
However, Bank of England Deputy Governor Sir Jon Cunliffe is also expected to speak on Tuesday and could affect British Pound trading.
The British Pound to New Zealand Dollar (GBP/NZD) exchange rate is trending in the region of 1.9596 with market movement of +0.77%. The New Zealand Dollar to British Pound (NZD/GBP) exchange rate resides at 0.5105.
