The Pound New Zealand Dollar (GBP NZD) exchange rate climbed over half a cent at the start of the European Session this morning following comments from Bank of England (BoE) policymaker Silvana Tenreyro.
Pound (GBP) Strengthened by Tenreyro Comments
Sterling sentiment ticked higher this morning as a BoE policymaker suggested that Brexit does not necessarily put a cap on any further interest rate hikes
While the newest member of the BoE’s Monetary Policy Committee (MPC), Silvana Tenreyro said that future interest rate moves would be dictated by Brexit, she suggested that nothing would be ruled out.
In an interview with Bloomberg Tenreyro said;
‘People up until recently thought that Brexit meant monetary policy would remain highly accommodative and interest rates would stay low forever. But Brexit might present other challenges that require the opposite. It might require an adjustment either way, and it’s not obvious. That’s something to be prepared for.’
Tenreyro’s hints that the bank may be prepared to raise interest rates in the near future comes as quite a surprise to many investors after the bank appeared to suggest that the hike earlier this month would be more of a one off.
New Zealand Dollar (NZD) Softens as Trade Figures Fall Short
At the same time the New Zealand Dollar struggled to fend of the Pound’s advances this morning as investors shied away from the currency as the country’s trade balance failed to meet expectations.
Figures released overnight showed that New Zealand’s trade deficit narrowed from NZ$1143m to NZ$871m in October, however this was behind expectations that the deficit would fall to NZ$750m.
The deficit was largely undermined by increased demand for mechanical machinery imports, offsetting the rise in exports to China.
GBP NZD Forecast: Sterling Rally to be Extended by PM’s Visit to Brussels?
Looking ahead the GBP NZD exchange rate may continue to press higher this afternoon as Theresa May visits Brussels for a European Summit.
While the summit is not focused on Brexit, May is expected to meet with European Council President Donald Tusk to discuss the progress of talks, with investors hoping that the PM will be able to open the way for trade talks to begin next month.
Meanwhile NZD investors are likely to turn their focus towards the Reserve Bank of New Zealand’s (RBNZ) Financial Stability Report on Tuesday, with the New Zealand Dollar likely to weaken if the bank preaches caution.
Current Interbank Exchange Rates
At the time of writing the GBP NZD exchange rate was trending around 1.9386 and the NZD GBP exchange rate was trending around 0.5157.
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