British Pound to New Zealand Dollar Exchange Rate Higher as Sterling Benefits From UK GDP

July 23, 2014 - Written by David Woodsmith

STORY LINK British Pound to New Zealand Dollar Exchange Rate Higher as Sterling Benefits From UK GDP

The Pound to New Zealand Dollar rate has seen a 0.32 per cent gain as Sterling is bolstered by strong UK GDP data released today. The current GBP NZD exchange rate is 1.98640.

The Pound Sterling fell against the NZ Dollar and the majority of its most traded peers on Wednesday after the minutes of the Bank of England’s July policy meeting caused investors to pare their expectations for an interest rate rise before the end of this year. The GBP NZD exchange rate is 1.96141.

The UK currency declined for a sixth consecutive day against the US Dollar and reversed gains made earlier against the ‘Kiwi’ after the minutes showed that members of the Bank of England’s monetary policy committee voted unanimously to maintain interest rates at the record low level of 0.5%. The minutes also highlighted that policy makers had concerns over the recent data release which showed that whilst unemployment in the UK has fallen, wage growth remains painfully weak.

“There seems to be a slightly greater focus on wage pressures as wages don not seem to be rising as they expected. That plays slightly dovish. I’m not surprised that Sterling has taken back some of those early gains,” said Paul Robson, a senior foreign exchange strategist at Royal Bank of Scotland.

All nine members of the policy committee voted in favour of maintaining rates at 0.5% but there were some signs that a few may be considering voted in favour of a change in interest rates next month. A big decider in that will be Friday’s UK GDP growth data. Some of the Bank of England officials have started to argue that the risk of a rate increase undermining the recovery has diminished as growth becomes more entrenched, according to the minutes. Others saw little indication of inflationary pressures building.

Bank of England Governor Mark Carney also disappointed the markets whilst giving a speech in Glasgow. Mr Carney told journalists that he doesn’t know when rates will rise, and cautioned that the UK economy is still going through ‘extraordinary times’. His comments did little to offer Sterling support.

The Pound Sterling and New Zealand Dollar also came under renewed pressure from geopolitical concerns later in the session after news broke that pro-Russian rebels shot down two Ukrainian fighter jets. The incident comes just days after the downing of a Malaysian passenger airliner. The impact of the news was slight however as the markets deemed that it would not broadly affect the markets.

The ‘Kiwi’ received support against the Pound as demand for riskier currencies improved in the wake of the European Union announcing laughably weak sanctions against Russia. Investors deemed that the measures would little impact upon the wider global economy.

Against its Australian relation the ‘Kiwi’ was broadly lower after Finance Minister Bill English said that the currency is ‘unsustainably high’.

"Almost anyone who has looked at it comes to the conclusion it's somewhere 10 to 15% overvalued,” Mr English said.

The ‘Aussie’ found support from stronger than forecast inflation data. According to the Australian Statistics Bureau inflation rose to 2.9% in the last quarter, beating the 2.7% expected by economists. As a result the currency gained broadly against the majority of its peers.

The New Zealand Dollar is likely to experience volatility tonight due to the latest interest rate decision by the Reserve Bank of New Zealand and the publication of the latest balance of trade data.

Latest NZ Dollar Exchange Rates

The New Zealand Dollar to Australian Dollar exchange rate is trading down -0.35% at 0.90801 NZD/AUD.
The New Zealand Dollar to Canadian Dollar exchange rate is trading down -0.33% at 0.91896 NZD/CAD.
The New Zealand Dollar to Euro exchange rate is trading down -0.36% at 0.63493 NZD/EUR.
The New Zealand Dollar to Pound exchange rate is trading down -0.33% at 0.50333 NZD/GBP.
The New Zealand Dollar to Dollar exchange rate is trading down -0.45% at 0.85420 NZD/USD.
The New Zealand Dollar to Rand exchange rate is trading down -0.37% at 9.00154 NZD/ZAR.

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