New Zealand Dollar Exchange Rates Stay Weak Despite Wider Trade Surplus

Published: 20 Oct 2017 21:24 Currency Markets Ecomomy News Forex

pound to new zealand dollar exchange rate forecast

At the beginning of the last full trading week in May the Pound to NZ Dollar exchange rate continued to slip back from the three month best registered last week with now less than a month to go until the fateful referendum polling day on 23 June on the UK’s membership of the EU (European Union).

The impact of the latest New Zealand trade data was largely minimal, leaving the New Zealand Dollar exchange rates (NZD) on a weaker footing against rivals in spite of a widened trade surplus.

Demand for the Pound (GBP), on the other hand, continued to strength as an Institute of Fiscal Studies (IFS) report increased confidence that the UK will not vote to leave the EU.

Today's big sterling mover, the latest EU referendum poll, has seen the pound to New Zealand dollar exchange rate rise sharply.

At time of writing, the GBP/NZD spot rate is trending one per cent up on the day's opening price.

Earlier: In the absence of any meaningful economic data releases from either the UK or New Zealand, it was left to the referendum to give the foreign exchange market some impetus.

In the UK, Treasury analysts warned that the UK faces a year long recession with a 3.6% growth slump and 500,000 jobs lost if it votes to leave the EU on 23 June.

With market sentiment damp amid falling commodity prices and global stocks volatility, however, there is a high chance that the GBP/NZD exchange rate will recover lost ground.

Pound to new zealand dollar exchange rate chart

Below are the latest live FX rates:

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foreign exchange rates
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1

Today finds the pound to pound spot exchange rate priced at 1.

FX markets see the pound vs us dollar exchange rate converting at 1.262.

The live inter-bank GBP-AUD spot rate is quoted as 1.936 today.

Please note: the FX rates above, updated 29th Mar 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.

Pound to NZ Dollar Exchange Rate Forecast: Chancellor George Osborne Predicts UK Recession in the Event of a ‘Brexit’

The Treasury report states that that the UK would suffer an "immediate and profound" economic shock of its own making.

Chancellor George Osborne said the UK had "one month to avoid a DIY recession. We've spent six years dealing with what happens when recession hits this country - we've got one month to make sure we don't do it to ourselves all over again".

Of interest, the Treasury's "cautious" economic forecast covers the two years immediately following a vote to leave and assumes that a bilateral trade agreement with the EU would have been negotiated. It also claims that there would also be a sharp rise in inflation and house price growth would be hit by 10%.

The Treasury also modelled a second, "severe shock" scenario where the UK votes to leave the EU but only obtains World Trade Organization membership so is out of the EU single market. Under these circumstances, after two years it predicts that UK GDP would be 6% lower with an increase in inflation, house prices would drop by a whopping 18% and 800,000 jobs would be lost.

As expected, the ‘Leave’ campaign rebutted the Treasury's latest analysis describing it as "fantastical". Iain Duncan Smith, a former cabinet minister said he did not believe there would be any "economic shock" from leaving, citing economists who have argued the economy would be able to add nearly a million new jobs in the same time period.
new zealand dollar to pound sterling exchange rate chart

Speculation of Reserve Bank of New Zealand (RBNZ) Rate Cut Weighs on New Zealand Dollar (NZD) Exchange Rates Demand

In a separate report, World Bank President Jim Yong Kim warned of the escalating dangers to developing nations already hurting from a slump in commodity prices if the UK votes to leave the EU in the 23 June referendum.

Kim said "There are huge problems in developing countries, and we're very worried they'll get much worse if there is a Brexit. It is one of the biggest risks we face. We do want to emphasize the point that the stability of the British economy is important for the stability of the global economy."

Kim added that uncertainty in global capital markets was very negative for the global economy at this time.

All in all, this week got off to a quieter start but Thursday’s UK GDP data announcement for the first quarter of 2016 is likely to be the data headline of the week in the UK.

For NZD, tonight’s data announcements on its trade balance should give the foreign exchange market a pointer towards the likelihood or otherwise of the RBNZ (Reserve Bank of New Zealand) following the steps of its neighbour, the RBA (Reserve Bank of Australia) and cutting New Zealand interest rates at its next meeting due on 8 June from its already record low rate of 2.25%.

The RBA cut rates earlier this month to an all-time record low of 1.75% with some analysts suggesting they may cut again in the next two months as the Australian economy suffers from its first period of deflation in seven years.

Support levels are set at 2.1368 and 1.1354 thereafter with resistance set at 2.1405 and 1.1428 thereafter.

The NZD/USD exchange rate has been pushed down today

The latest US ecostats have been highly supportive for the USD, although this has meant a converse decline of the NZD.

The data in question concerned US new home sales in April, which rose prodigiously on their former figures.

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