GBP/NZD Conversion Rate Climbs despite Absence of British Data
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate surged by around 1.4% on Monday afternoon.
Despite a complete lack of domestic data today, the British Pound strengthened versus most of its currency rivals. This is primarily the result of slightly improved bets regarding the timing of a Bank of England (BoE) benchmark rate hike after the Euro surge following the shock European Central Bank (ECB) policy decision last week eased concerns regarding GBP/EUR overvaluation. Whilst the BoE are not expected to hike the cash rate on Thursday, the accompanying meeting minutes and following press conference may see a more hawkish outlook than in previous weeks.
‘All things being equal, this (ECB decision) is supportive for our hawkish BoE view. We expect the Bank Rate and the stock of purchased assets to stay unchanged at 0.50% and £375bn, respectively. With respect to the rate decision, we think the vote will be unchanged at 8-1.’ said Danske Bank in a note to its clients.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.2680.
NZD to GBP Exchange Rate Dives as Risk Appetite Dampens on Fed Rate Hike Bets
After last Friday saw US Change in Non-Farm Payrolls data eclipse expectations, the chances of a Federal Reserve cash rate hike this month improved significantly. This weighed on trader risk appetite, which was already damp in the face of tanking crude prices. The resultant US Dollar uptrend also added to ‘Kiwi’ (NZD) headwinds.
With low crude prices and soft demand from the world’s second-largest economy causing commodity values to drop considerably, the resultant detrimental impact on New Zealand’s economy has caused many traders to predict that the Reserve Bank of New Zealand (RBNZ) will be forced into easing policy on Wednesday. Also, in recent weeks the New Zealand Dollar trade weight rallied significantly to levels considered overvalued. ‘In our view, the lift in the Trade Weighted Index (TWI) since the September MPS means a rate cut in December should be a done deal’ stated Jane Turner, ASB senior economist.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate dropped to a low of 2.2448 during Monday’s European session.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast: Central Bank Decisions to Provoke Volatility
In a week where both the BoE and the RBNZ will make interest rate decisions, the GBP/NZD conversion rate is likely to see significant volatility. Tuesday may also see GBP/NZD changes with China’s Trade Balance and Foreign Direct Investment data likely to impact the New Zealand Dollar. Meanwhile, Tuesday’s British Industrial and Manufacturing Prodiuction data should cause Sterling movement. With the markets pricing in a 25 basis point cut to the RBNZ overnight cash rate, the Pound Sterling should advance versus the ‘Kiwi’ on Wednesday. However, gains could be reversed on Thursday if the BoE opt to adopt dovish rhetoric with regards to policy outlook.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate advanced to a high of 2.2700 during Tuesday’s European session.
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