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Pound (GBP) Gains on New Zealand Dollar (NZD) after Attitude Adjustment

April 25, 2016 - Written by Tim Boyer

The Pound to NZD exchange rate has been extremely favourable today, thanks to economists seeing a reduced chance of a 'Brexit' occurring.

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate attempts to continue its recent rally during Monday’s session on decreased ‘Brexit’ concerns while New Zealand markets took Anzac Day off.

UK Retailer BHS Faces Closure, Loss of 11k Jobs



GBP/NZD traded lightly on Monday - New Zealand markets had closed while the nation observed a public holiday, and investors of the Pound had both reason to be wary and reason to have confidence in the currency.

The exchange rate advanced to a near-month-high on Monday’s session, following its massive hike of over 480 pips throughout last week. At the time of writing, the pair is currently up around 0.6% and trends in the region of 2.1134.

Mixed news hit Sterling sentiment throughout Monday, but the biggest headline had been the announcement of British Home Stores (BHS) entering administration after attempts to sell stores to Sports Directs fell through.

As reported by The Guardian, administration group Duff & Phelps have decided to keep stores open as they search for potential buyers and discuss damage control procedures to minimise losses to almost 11,000 jobs.

On the other hand, the Pound was likely buoyed by further strengthening from the EU referendum’s ‘Remain’ camp. The BBC reports statements made by Home Secretary Theresa May;

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‘In her first speech of the campaign, Mrs May said the UK had "forgotten how to lead" in Europe and must re-assert itself to force change from within.

Membership made the UK "more secure from crime and terrorism", she argued.

The UK could veto Turkey joining the EU, she added, after Vote Leave's Michael Gove warned of an immigration free-for-all if the UK stayed in.’

New Zealand Dollar (NZD) Weak on Lack of Data



The ‘Kiwi’ was understandably limp during Monday’s trade session while Anzac Day was observed, but several factors weighed on the NZD that prevented it from recovering on the Pound’s mixed sentiment.

New Zealand has been without key data releases since last Thursday, when March’s credit card spending report showed a slowing from 7.3% to 4.8%.

Mixed commodity data has also proven difficult for the ‘Kiwi’, with risk sentiment generally low while commodity prices fluctuate.

While prices of New Zealand’s key commodity (milk) were revealed to have risen 3.8% last week, milk stocks in Europe and the US had been large enough to slightly offset milk demand.

The unpredictable price of oil has also influenced risk-off movements. Many analysts assumed oil prices would wane following last week’s OPEC meeting, but Reuters reports that oil prices begun to rise again this week.

GBP/NZD Exchange Rate Forecast: New Zealand Trade Balance, Interest Rate Decisions In Focus



The New Zealand Dollar may be able to reverse some of its losses against the Pound in the coming days as a slew of important domestic data is due for release amid relatively quiet UK data.

While the Pound could continue to be weighed down by ongoing BHS discussions – which could see the ultimate losses of over 10,000 jobs – the ‘Kiwi’ could begin more definitive movement following the opening of New Zealand trade on Tuesday.
First up, Tuesday sees the release of a single key British report, BBA’s mortgage approvals release which is predicted to improve from 45,892 to 46,500.

Between then and Wednesday’s next set of UK data, New Zealand is due to release its March trade balance report late on Tuesday. The trade balance is tipped to rise from 339m to 401m, while the year-to-date balance deficit is forecast to worsen from -3323m to -3585m.

Wednesday will be far busier for the pairing, with Britain’s Q1 GDP report releasing in the morning and the Reserve Bank of New Zealand’s (RBNZ) latest key interest rate announcement set for Wednesday night.

At the time of writing, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate traded at around 2.1134, while the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate trended in the region of 0.4730
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