The Pound jumped against the New Zealand Dollar during trading on Tuesday, though it is possible that these advances will fall away in the near-term on recurrent concerns.
Apart from declining against the Pound, the New Zealand Dollar was able to rally against the rest of its peers, thanks to a significant rise in dairy prices.
Pound Boosted by ‘Brexit’ Vote News, New Zealand Dollar Up on GDT Result
The major UK news on Tuesday concerned the nation’s September inflation rate results, which showed a higher-than-expected rise on the year from 0.6% to 1%, instead of 0.8%.
This raised concerns that the less well-off would lose out and that UK prices would gradually ratchet up over 2017.
More solid support for the Pound came direct from Downing Street, when it was stated that a Commons vote to ratify ‘Brexit’ was highly likely before Article 50 was triggered; this provided yet another chance for a potentially damaging ‘Brexit’ to fail at the final hurdle.
From New Zealand, the ‘Kiwi’ found itself in high demand over the course of trading, thanks to the Global Dairy Trade price index rising by 1.4%; this previously fell by -3%.
Other New Zealand news was not so positive, as Monday saw the Q3 annual and quarterly inflation rates fall, raising fresh fears that the Reserve Bank of New Zealand (RNBZ) would be cutting interest rates in the near-term.
Pound Sterling Outlook: Progress of ‘Brexit’ Vote Likely to Shift GBP Going Ahead
The Pound made unexpected gains in the wake of the news that a Commons vote on ‘Brexit’ was likely. Because of this, it is likely that the continued progress of this motion through the courts will be an influential factor on the Pound in the future.
Should a Commons vote on ‘Brexit’ or on when Article 50 will be triggered be officially confirmed, the Pound may well soar. However, if this news ultimately proves only to delay, not halt a UK exit from the EU, then the Pound may well slump against the ‘Kiwi’ and the rest of its rivals
New Zealand Dollar Expectations: Continued Milk Price Support Needed to Maintain NZD Gains
With an elusive rise in the price of milk further raising the value of the New Zealand Dollar, continued support in the area would help to keep the ‘Kiwi’ appealing in the eyes of investors.
The Global Dairy Trade auctions have historically featured fluctuations on an almost auction-by-auction basis, but if two or three sustained rises are recorded, the ‘Kiwi’ could well hold onto its gains for the foreseeable future.
Recent Interbank Exchange Rates
At the time of writing, the Pound New Zealand Dollar (GBP NZD) exchange rate was trending in the region of 1.70 and the New Zealand Dollar Pound Sterling (NZD GBP) exchange rate was trending in the region of 0.58.
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