Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast to Plunge after British Inflation Missed Estimates
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined by around -1.0% on Tuesday afternoon.
In what can be considered poor taste, many of those campaigning for a British exit from the European Union have used today’s Brussels tragedy to boost the argument for a ‘Brexit’ vote. There is now mounting fear among traders that those undecided on the EU referendum vote may be persuaded to vote for an exit, with the out campaign stating that the situation in Brussels proves the danger posed to national security from migrants and refugees. This caused the Pound to decline significantly.
Adding to Sterling headwinds on Tuesday was mixed results from domestic data publications. One particularly disappointing ecostat was February’s Consumer Price Index. Both the annual and monthly readings failed to meet with expected inflationary growth. This has made many traders question recent statements from Bank of England (BoE) officials that the next move will be to tighten policy.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.1036.
New Zealand Dollar to Pound Sterling (GBP/NZD) Exchange Rate Forecast to Advance despite Increased Safe-Haven Demand
The New Zealand Dollar softened versus nearly all of its major peers after the Brussels attacks caused traders to flock to safe-haven assets. The resultant US Dollar appreciation also weighed on demand for the antipodean currency. There’s a ‘flight to safety in foreign-exchange and rates after the explosions,’ said London-based economist Richard Kelly. ‘The attacks heighten the uncertainty for now.’
‘Kiwi’ (NZD) depreciation has been somewhat slowed today, however, thanks to news of market intervention from the People’s Bank of China (PBoC). ‘The PBOC may try to keep the basket stable and slightly above 98 in the near term, which it has been doing the past few days,’ said Tommy Xie, an economist based in Singapore. ‘If the index breaks below 98, the market will request the central bank to justify how it defines a stable currency.’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate dropped to a low of 2.0999 during Tuesday’s European session.
GBP/NZD Exchange Rate Forecast: Market Sentiment to Drive Movement
With a complete absence of British economic data on Wednesday there is a high chance that the GBP/NZD exchange rate will continue to see movement in response to market sentiment. With that said, however, New Zealand’s Trade Balance data on Wednesday evening may provoke volatility.
US Dollar positioning will also impact the GBP/NZD conversion rate. However, if the US Dollar advances too steeply it may actually be ‘Kiwi’ supportive given that the Federal Reserve will wish to avoid tightening monetary policy while the US Dollar is so significantly overvalued.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate reached a high of 2.1298 during Tuesday’s European session.
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