The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate dropped to a low of 1.9996 during the Australasian session as investors reacted to the Reserve Bank of New Zealand’s policy statement.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Plummets as RBNZ Advocates More Rate Hikes
Notable Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate losses were recorded overnight as economists responded to the RBNZ announcement.
The central bank left interest rates on hold, as expected, but indicated that they would continue to increase borrowing costs next year.
Governor Graeme Wheeler noted; ‘Some further increase in the official cash rate is expected to be required at a later stage.’
The hawkish remark saw the New Zealand Dollar advance on almost all of its currency counterparts.
The GBP/NZD pairing consolidated declines after the UK’s RICS house price balance report showed that property price growth slowed to an 18-month low.
Earlier…
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate held declines during the European session, but GBP/NZD gains could occur overnight.
GBP/NZD Exchange Rate Could Rally on Dovish RBNZ
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate could push higher during the South Pacific session if the Reserve Bank of New Zealand delivers a dovish policy statement.
While the central bank is expected to leave rates on hold (an action which would be neutral for the GBP/NZD pairing) it could attempt to talk down the ‘Kiwi’ or dwell on the ongoing slide in commodity prices.
The RBNZ may also mention the slowing pace of growth in China and Australia, New Zealand’s largest economies, and the detrimental impact this could have on New Zealand’s own growth prospects.
Negative remarks from the RBNZ could undermine demand for the ‘Kiwi’ and see the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate rally during Australasian trading.
According to analysts with Morgan Stanley; ‘We continue to project commodity currencies to stay on the back foot. When the Reserve Bank of New Zealand meets this Thursday, it is expected to move to a neutral bias with ongoing indications of intervention in currency markets.’
Earlier…
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate fell by over 0.3% on Wednesday, brushing a low of 2.0297.
GBP/NZD Pares Fonterra Gains
While the ‘Kiwi’ initially declined in response to an announcement from Fonterra (New Zealand’s largest dairy producer), the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate slid during the European session.
As dairy produce is New Zealand’s main export, any developments relating to the commodity have an impact on NZD trading.
Consequently, the New Zealand Dollar fell against the Pound and US Dollar after Fonterra slashed its forecast payout to 4.60 Dollars per kilogram of milk solids – a reduction of 60 cents.
This could reduce dairy income by over 6 billion Dollars on the year.
According to economist Tim Mackle; ‘We’ve calculated that around a quarter of dairy farmers are facing some business risk this season at the 4.70 Dollars milk price. That means they will have difficulty meeting their interest payments, rent and farm working expenses without incurring more debt. We expect farmers will have to apply more thinking and planning around cash flow and business management decisions as a result of this latest forecast.’
However, the New Zealand Dollar later recovered its initial declines.
New Zealand Dollar (NZD) Exchange Rate Boosted by House Sales
During the South Pacific session the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined as a result of New Zealand publishing encouraging house sale data.
Figures compiled by the Real Estate Institute New Zealand (REINZ) showed that house sales increased on an annual basis for the first time in over a year in November.
The REINZ House Price Index also rallied by 3.3% on the month in November, resulting in an annual increase of 6.0%.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
Given that the Reserve Bank of New Zealand is scheduled to release its interest rate decision at 20:00 GMT, additional GBP/NZD movement can be expected.
While it is believed that the RBNZ will leave interest rates unchanged, the accompanying statement could provoke currency market volatility depending on the tone adopted.
If the RBNZ attempts to talk down the currency, the GBP/NZD exchange rate could recoup some of its losses.
On Thursday influential UK reports are in short supply but some Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate movement could be occasioned by a speech to be given by the Bank of England’s (BoE) Ian McCafferty.
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,0.7711,
New Zealand Dollar,,Euro,0.6224,
New Zealand Dollar,,Australian Dollar,0.9258,
New Zealand Dollar,,Pound Sterling,0.4921,
US Dollar,,New Zealand Dollar,1.2980,
Euro,,New Zealand Dollar,1.6057,
Australian Dollar,,New Zealand Dollar,1.0795,
Pound Sterling,,New Zealand Dollar,2.0316,
[/table]
