- Pound NZD Exchange Rate Over 1.83 before BoE Decision – Soars to 1.8550 afterwards
- Sterling (GBP) Soars after BoE Freezes Key Interest Rate – BoE defies cut expectations
- New Zealand Dollar (NZD) Plummets as RBNZ Hints at Cut – August rate cut expected?
- Forecast: GBP/NZD Could Surge Higher This Week – Pair to remain volatile long-term
The Pound NZD Exchange rate has gained around five cents so far throughout Thursday’s session, as a plummeting New Zealand Dollar on RBNZ cut fears and a soaring Pound on BoE’s shocking interest rate freeze let GBP/NZD easily capitalise and shoot to a new July high.
GBP/NZD has gained over 7 cents since the week’s opening levels of 1.7740. The pair had briefly dropped down from Wednesday’s high of 1.8355 to a low of 1.8051 due to Wednesday’s high BoE rate cut bets. However, during Thursday’s session alone has soared and currently trends in the region of 1.8530 – the highest GBP/NZD levels since June.
Pound (GBP) Soars Across the Board as BoE Leaves Rates Frozen
The Pound experienced a widely unexpected rally on Thursday, surprising global markets by continuing the currency’s considerable uptrends since Monday.
Sterling rallied across the board on Monday and Tuesday following the sudden confirmation that Theresa May would be Prime Minister by Wednesday evening.
While Sterling dropped on Wednesday amid expectations of a Bank of England (BoE) interest rate cut, its rally was surprisingly extended on Thursday when the BoE defied market expectations by leaving the key UK interest rate frozen.
This was despite widespread expectations that the bank would be introducing cuts and stimulus measures in its first meeting since the Brexit vote.
According to the central bank’s July 14th minutes report, plans were left on hold for now to give the post-Brexit uncertainty fog a little more time to disperse.
‘Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate. In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August.’
New Zealand Dollar (NZD) Loses Favour as RBNZ Rate Cut Bets Rise
The New Zealand Dollar, despite experiencing solid appeal last week and earlier this week, plummeted across the board during Thursday’s Asian session as the Reserve Bank of New Zealand (RBNZ) suddenly announced that it would be giving markets an update on the economy next week.
The central bank’s sudden move towards making a statement despite the next policy meeting not being until the 11th of August has led investors to believe that an interest rate cut could be on the way.
RBNZ’s last policy meeting on the 9th of June was surprisingly hawkish, with policymakers stating that market volatility had abated and that global growth had seemingly stabilised.
However, since then the global market landscape has shifted considerably – due to Britain’s vote to Leave (or Brexit) from the European Union in late-June.
In normal circumstances, analysts may expect that the RBNZ remain largely calm between its June and August meetings despite the month gap in between. However, according to Scoop, the announcement of this update is cause for concern:
‘Traders are now pricing in a 60 percent chance of an interest rate cut at next month’s monetary policy review after the RBNZ said it will “issue a brief update on its economic assessment” on July 21 because of the longer gap between meetings in the bank’s new timetable. Before the announcement, traders had priced in a 40 percent chance the official cash rate will be cut in August.’
Pound NZD Exchange Rate Forecast: GBP/NZD Could Bounce Back on Profit-Taking
As the Pound soars and the New Zealand Dollar plummets, the exchange rate is likely to bounce back from its extreme movements this week after markets begin to cool.
Sterling’s rally could last until the end of the week, but the Brexit-correlated currency is highly likely to remain pressured as it is still hardly business-as-usual for the UK economy.
With the Bank of England’s (BoE) August policy decision follows a mere three weeks (August 4th) after today’s announcement, it won’t be long before the higher-than-ever stimulus bets begin to weigh on the Pound.
Meanwhile, the New Zealand Dollar could also remain pressured in both the short and long-term, as markets will be highly anticipating the Reserve Bank of New Zealand’s (RBNZ) statement on the economy next week.
It seems like August could shape up to be a big month for both the British and New Zealand economies, meaning the typically volatile GBP/NZD exchange rate could be more volatile than ever.
At the time of writing, the Pound NZD exchange rate trended in the region of 1.8530, while the NZD Pound exchange rate traded at around 0.5400.
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