Pound to New Zealand Dollar (GBP/NZD) Climbs as Rate Hike Speculation Supports Sterling

April 22, 2015 - Written by Tim Boyer

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Climbs as Rate Hike Speculation Supports Sterling

GBP/NZD Gains after BoE Minutes Release

The New Zealand Dollar fell against the Pound after upbeat Bank of England meeting minutes emerged on Wednesday. The Pound was able to climb against many of its major peers as investors priced in sooner-than-expected interest rate hikes. The central bank announced that for two policymakers on the committee, the decision on whether to keep interest rates stable was ‘finely balanced’ and therefore suggests that a divergence amongst central bankers could soon occur in coming months. Furthermore, the minutes highlighted some optimism amongst bankers when considering the UK economy and Europe.

Industry expert Howard Archer stated: ‘On the growth side, the MPC are more optimistic about growth prospects in the Eurozone, which they note would be beneficial for the UK economy.’

RBA Hints at Rate Cuts, Aussie & Kiwi Decline

The ‘Kiwi’ also felt the impact of central bank movements when the Reserve Bank of Australia suggested that interest rate cuts could occur in the near future. The ‘Aussie’ sank and the ‘Kiwi’ exchange rate climbed as New Zealand currently houses higher interest rates and a certain degree of stability.

RBA Governor Glenn Stevens stated: ‘So interest rates should be quite accommodative and the question of whether they should be reduced further has to be on the table.’

However, the prospect of lower interest rates was thwarted somewhat by Australia’s upbeat inflation figure, which pressured the New Zealand Dollar lower. The New Zealand Dollar had been creeping higher against the Australian Dollar and many experts thought the currency could reach parity in the near future.

Strategist Imre Speizer stated: ‘Parity is a significant psychological level for the market and probably one which will attract participants trying to breach it as well as those trying to defend it.’

The Reserve Bank of New Zealand is due to review its own interest rates on April 30th but market participants are expecting a dovish central bank in light of recent events. Thursday could be an interesting day for the Pound and New Zealand Dollar exchange rates with several reports of influence due for release. The Pound could feel the impact from the Public Sector Net Borrowing number as well as Retail Sales data. On the year, sales are expected to record an increase from 5.1% to 5.5%.

The GBP/AUD exchange rate was trading in the region of 1.9359

Meanwhile, the New Zealand Dollar could be affected quite significantly by the March Kiwi Credit Card Spending numbers. February had seen the annual stat reside at 5.8% with the month registering -0.1% contraction.

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TAGS: Currency Predictions New Zealand Dollar Forecasts Pound Ne Forecasts