Overnight the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate advanced to its highest level in over five years as the RBNZ’s interest rate decision loomed.
Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate News: ‘Kiwi’ Falls as Dairy Prices Drop, Greek Riots Impact Risk Appetite
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was able to register a 300 pip gain and advance to its strongest level in over five years on Wednesday as ANZ Bank revised down its Fonterra milk price forecasts from 4.50 Dollars a kg to 3.75 Dollars a kg after dairy prices slumped by more than 10% in the latest auction.
One analyst commented; ‘Farmers now face two consecutive seasons of extremely low milk prices. The majority of farmers can’t break-even at such a low milk price. Farm debt levels will rise. Rural communities will suffer as farmers reduce spending to the bare essentials.’
RBNZ Rate Cuts Expected as NZ Inflation Holds Below Target, NZD/GBP, NZD/USD Exchange Rates Decline Today
The New Zealand Dollar’s downtrend against peers like the Pound (NZD/GBP) and US Dollar (NZD/USD) was exacerbated as domestic inflation data showed a slower pace of inflation than projected in the second quarter of the year.
Consumer prices were up 0.4% on a quarterly basis and not the 0.5% expected, though this did result in an annual figure of 0.3% that was in line with projections.
The data prompted this response from economist Paul Bloxham; ‘We were already expecting a 25 basis point cut next week and stick to that call, although a straight 50 basis point cut is now a real possibility.’
Pound Sterling to New Zealand Dollar Future Currency Forecast: BoE Meeting Minutes, RBNZ Interest Rate Decisions to Impact GBP/NZD Exchange Rate Trading – New 2015 Best Rate Ahead?
Next week the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate could ascend to new multi-year highs if the outlooks of the Bank of England (BoE) and Reserve Bank of New Zealand (RBNZ) appear to be diverging even more markedly.
The Bank of England (BoE) is set to publish the minutes from its last policy meeting next Wednesday. In recent weeks policymakers have become more vocal on the subject of borrowing costs, with even the normally dovish David Miles indicating that interest rates will be raised ‘soon’.
If these minutes show that the Monetary Policy Committee (MPC) was split on the decision of whether or not to increase interest rates immediately, the Pound is likely to rally across the board and could push even higher against the New Zealand Dollar.
Also next Wednesday the Reserve Bank of New Zealand (RBNZ) is due to deliver its interest rate announcement.
Some economists believe the central bank will cut borrowing costs but even if it doesn’t, recent negative NZ data means it is likely to hint that further adjustments are on the horizon.
If the RBNZ offers a dovish outlook for borrowing costs, the GBP/NZD exchange rate is very likely to advance beyond its recent over five-year highs.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending in the region of 2.3892, the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate was trending in the region of 0.4185.