Pound (GBP) Falls against New Zealand Dollar (NZD) As Oceanic Sentiment Climbs

March 4, 2015 - Written by Tim Boyer

STORY LINK Pound (GBP) Falls against New Zealand Dollar (NZD) As Oceanic Sentiment Climbs

Pound (GBP) Falls against New Zealand Dollar (NZD) As Oceanic Sentiment Climbs

The Pound slipped against the New Zealand Dollar on Wednesday after the UK’s service sector showed evidence of cooling. In addition, the ‘Kiwi’ was offered some support along with other commodity currencies when the Australian central bank failed to cut interest rates by another 25 basis points as economists expected. ANZ stated: ‘Commodity currencies broadly rose overnight after the RBA left rates unchanged and Canadian fourth quarter GDP was stronger than expected, with positive revisions. The New Zealand Dollar was dragged along for the ride.’ Furthermore, ANZ’s index of commodity prices showed a 1.8% rise in February for raw materials.

The report read: ‘Dairy prices—specifically whole milk powder—provided an upward turn in the ANZ Commodity Price Index, which rose by 1.8% in February. Outside of dairying though prices were soft, particularly for the meat and fibre sector. On an annual basis the Index was down 16.6% but remains high by historical standards.’ Dairy prices tumbled by around a massive 60% in 2014 and had a detrimental impact on New Zealand farmers and the Oceanic economy as a whole.

Meanwhile, the Pound is gearing toward an interesting day on Thursday as the Bank of England is due to announce its interest rate decision. The central bank is expected to keep rates on hold as it has done since 2009. However, policymakers have been slightly more hawkish of late despite tumbling inflation. Many investors had expected the central bank to become more dovish as other global institutions cut rates and reduce growth outlooks. However, the BoE appears to be walking its own path in comparison, suggesting more likely than not rate hikes will occur in the near future.

The BoE has also highlighted up to 50 potential cases of market rigging after its chief currency dealer was fired in a major exchange rate scandal last year. BoE Governor Mark Carney stated: ‘[These were] issues that in the public domain could have brought the Bank’s reputation into dispute. It’s disappointing. This is an employee who in other respects had served the Bank well but with a senior officer at the Bank, with multiple misjudgements, [if] you have those facts in front of you, you have to act.’

The UK saw the release of Markit’s Services Purchasing Managers Index, which slipped below expectations. The February ecostat dipped from 57.2 to 56.7 instead of rising to 57.5 as economists estimated.

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