‘Kiwi’ (NZD) Exchange Rate Trends Lower ahead of RBNZ Rate Decision Today
The New Zealand Dollar (NZD) has lost some of yesterday’s bullishness as pundits opt for greater caution ahead of the first Reserve Bank of New Zealand (RBNZ) interest rate decision of 2016. Consequently, despite a disappointing Nationwide House Prices figure, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has been making gains around 2.2045.
Despite renewed declines on global stock markets the New Zealand Dollar (NZD) has been on an uptrend against rivals on Tuesday, as action from the People’s Bank of China (PBoC) bolsters risk appetite.
Dovish BoE and ‘Brexit’ Concerns Weigh on Pound Sterling (GBP)
Confidence in the Pound (GBP) has remained largely muted at the start of the week, with little particular incentive to buy back into the softening currency as a Bank of England (BoE) interest rate hike continues to look like a more distant possibility. Traders are also showing some concern as the debate over the economic consequences of a ‘Brexit’ intensifies, spooked by the potential of a significant downturn in the domestic economy. While domestic data from the UK has remained less than impressive the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate nevertheless trended higher on Monday.
New Zealand Dollar (NZD) Exchange Rate Rallies after PBoC Intervenes to Boost Market Liquidity
Overnight the New Zealand Services PMI showed that the domestic service industry had slowed slightly from 59.8 to 58.9 in December, denting the ‘Kiwi’ (NZD) in spite of the fact that the sector remained relatively robust and firmly in expansion territory. A fresh bout of declines in global stock markets also helped to push the New Zealand Dollar lower, with the Shanghai Composite Index having plunged 6.4% to wipe out much of the previous days’ rally. Nevertheless, as the People’s Bank of China (PBoC) injected 440 million Yuan (CNY) into the domestic market, in order to maintain liquidity ahead of the Chinese New Year celebrations, the commodity-correlated currency was soon on more bullish form.
With the appeal of the Pound still limited and more dovish words from BoE Governor Mark Carney the GBP/NZD exchange rate has remained slumped throughout today’s European session.
GBP/NZD Exchange Rate Forecast: RBNZ Rate Decision Predicted to Weigh on ‘Kiwi’
Fresh volatility should be expected for the ‘Kiwi’ tomorrow ahead of the Reserve Bank of New Zealand’s (RBNZ) first policy meeting of 2016. There is some speculation that the central bank could move to cut interest rates in response to the mounting downside risks that are dragging on the domestic economy. Should a rate cut occur at this juncture the GBP/NZD currency pair is likely to retake its recent losses, although a less dovish meeting would shore up the New Zealand Dollar further.
Current GBP, NZD Exchange Rates
At the time of writing, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending lower at 2.2077, while the New Zealand Dollar to Pound Sterling (NZD/GBP) pairing was making gains around 0.4527.