New Zealand Dollar FX - GBP to NZD Exchange Rate Steady; NZ Continues to Gain vs Euro and US Dollar

August 27, 2014 - Written by Ben Hughes

STORY LINK New Zealand Dollar FX - GBP to NZD Exchange Rate Steady; NZ Continues to Gain vs Euro and US Dollar

The Pound to New Zealand Dollar exchange rate (GBP/NZD) traded lower during the mid-week session as the NZ currency advanced following positive news for New Zealand’s dairy sales.

The Pound Sterling (GBP) has witnessed a disappointing week thus far with losses against the Euro (EUR), US Dollar (USD) and Australian Dollar (AUD) due to the small amount of data releases that it’s witnessed; however next week shall see events of high influence that will cause the Pound to fluctuate.

Let's examine the latest NZD positions within the forex markets today (revised 29/08/2014):

- The NZ Dollar to Australian Dollar exchange rate is trading up 0.13 pct at 0.89686 NZD/AUD.
- The New Zealand Dollar to Canadian Dollar exchange rate is 0.1 per cent down at 0.90827 NZD/CAD.
- The New Zealand Dollar to Euro exchange rate is up 0.02 pct at 0.63530 NZD/EUR.
- The New Zealand Dollar to Pound exchange rate is 0.02 per cent lower at 0.50473 NZD/GBP.
- The NZ Dollar to US Dollar exchange rate is trading up 0.01 pct at 0.83756 NZD/USD.

The New Zealand Dollar was trading lower in the currency market on Tuesday, after economists’ forecasts for interest rate hikes by the Reserve Bank of New Zealand (RBNZ) shifted. Expert in the field Martin Rudings stated: ‘The interest rate market is taking off interest rate hikes that have been priced into the market over the next 12 months and that’s just taken the steam out of the “Kiwi.” A lot of people have been buying “Kiwi” in anticipation of interest rate hikes and I think now that they are pricing them differently, the currency people are selling out of the “Kiwi” Dollar.’ Interest rate hikes are very highly anticipated in the market as the debate between who will hike rates first since the 2008 recession circulate.

Rudings continued: ‘The path going forward looks like further downside for the “Kiwi”. The “Kiwi” certainly looks like the ugly currency, along with the Euro [EUR]. The backdrop is a stronger US Dollar. The market is starting to come around to the fact that we are likely to see a stronger US Dollar. That’s not only because of the perception that interest rates in the US will rise earlier than the Fed has predicted, but also by default because there’s not many currencies out there that look very good at the moment.’

Whilst many currencies are struggling in the market, the New Zealand Dollar has risen against other majors on Wednesday after the Chinese milk shortage proved a beneficial gain to New Zealand. Dairy giant Fronterra, announced that it plans to invest in a 20% stake in one of China’s biggest milk producers Beingmate. The partnership will give the New Zealand company a line into the infant formula market in China, which could prove hugely beneficial. However, Fronterra’s partnerships have not always proved favourable. In 2008 a former partner of Fronterra’s—Sanlu, was found to be adding toxic chemicals to their children’s formulas in an attempt to bolster their product. The result was catastrophic, resulting in the deaths of some children and the hospitalisation of many others.

Fronterra representative Theo Spierings stated: ‘China is a completely different environment now, Beingmate is a completely different partner... and we are also completely different from where we were five, six years ago.’

The Pound to New Zealand Dollar Exchange Rate Forecast This & Next Week:

The Pound Sterling (GBP) has seen limited scope to gain from domestic figures this week as thus far the only data releases have been the British Banker’s Association’s recording of a lower than expected mortgage approvals in the UK of 42,792.

Friday may prove slightly more influential for Sterling with the publication of UK Consumer Confidence and Nationwide House Prices.

Next week however is set to be far more interesting for the UK economy and indeed the Pound. Net Consumer Credit and Manufacturing PMI is expected on Monday, Bank of England Inflation Figures are scheduled for Tuesday, whilst Thursday will see the release of the Bank of England’s interest rate decision which is expected to remain at the historic low of 0.50%.

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