The New Zealand Dollar (NZD) was able to hold its ground throughout Tuesday’s European session, being one of the only major currencies to advance against Sterling (GBP) throughout the day despite the Pound’s ‘short-cover’ rally.
Despite July’s New Zealand trade data disappointing expectations the NZD remained on a stronger footing, boosted by the news that Standard & Poors had left the country’s credit rating unchanged.
As a result the GBP NZD exchange rate returned to a downtrend, deriving no support from the latest BBA Loans for House Purchase result.
A look at today’s latest Pound Sterling currency FX rates before the rest of the news;
On Saturday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The GBP to GBP exchange rate converts at 1 today.
The pound conversion rate (against australian dollar) is quoted at 1.928 AUD/GBP.
NB: the forex rates mentioned above, revised as of 20th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Lower RBNZ rate cut bets will leave the New Zealand Dollar exchange rates in a solid position during the market’s next risk-on rally.
However, for the time being risk-sentiment remains low as markets focus on the US economy this week.
A rebound from previous weakness and demand for the safe-haven US Dollar allowed the GBP/NZD exchange rate to recover recently.
Markets had reacted bearishly to rumours that the UK government may trigger Article 50 by April 2017, causing a significant drop in the British Pound, despite the notion being quickly dismissed by Downing Street.
A lack of domestic data recently left the Pound Sterling to New Zealand Dollar exchange rate moved by market sentiment, with the weakened GBP becoming an attractive option for investors once again.
An upcoming Federal Reserve symposium kept the New Zealand Dollar weak as markets awaited hints over the direction of US monetary policy.
The approach of the hugely important Jackson Hole Symposium kept the New Zealand Dollar weak recently, with markets expecting Federal Reserve Chair Janet Yellen would announce that a rate hike was likely in the near future.
Meanwhile, the UK’s Brexit vote could help fill skill shortages in New Zealand, as Immigration New Zealand (INZ) has revealed a spike in interest from UK nationals who are interested in moving to the country.
Registrations for a New Zealand visa increased almost tenfold the day the referendum results were announced, while the past 49 days has seen 10,647 registrations compared to the previous year’s 4,599 over the same period.
A correctional rebound may be strengthening GBP/NZD exchange rates, but upcoming UK data is not forecast to be supportive for the Pound.
Tuesday’s CBI Trends Total Orders figure is predicted to drop further into negative territory, while Wednesday’s BBA Loans for House Purchase data is expected to show a slowdown in mortgage growth.
Morgan Stanley analysts claim;
‘While GBP has appreciated on the back of strong post-Brexit UK CPI, employment and retail sales numbers, we would use the rally to sell.’
‘With inflation rising and nominal yields declining, UK's real yields are falling rapidly, making GBP unattractive.’
US Monetary Policy Outlook to Continue Weighing on NZD Exchange Rate Forecasts
Market anticipation of Friday’s speech by Federal Reserve Chair Janet Yellen will likely continue to weigh on the New Zealand Dollar exchange rates over the coming days.
According to Barclays analysts;
‘We expect Yellen to deliver a stronger signal about the likelihood of a near-term rate hike and retain our view that the next increase will occur in September.’
Domestic data could generate headwinds as well, with Tuesday’s trade data expecting to show a weakening in the total value of exports compared to an increase in imports, while the trade balance is predicted to drop from a surplus of 127 million to a deficit of -325 million.