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GBP NZD Exchange Rate Tight after UK Trade Surplus Hits Record High, Article 50 Debate Continues

February 21, 2017 - Written by John Cameron

The British Pound to New Zealand Dollar exchange rate was able to limit its losses on Wednesday afternoon after UK growth results disappointed investors earlier in the day.

Demand for risky currencies like the ‘Kiwi’ faded on Wednesday afternoon as investors awaited the publication of the Federal Reserve’s latest minutes report. However, GBP/NZD could fall again before the weekend if they disappoint.

[Previously updated 21/02/2017]

GBP NZD Exchange Rate Sees Marginal Gains after Record Finances Figure



The news that the Government hit a 9.4bn surplus in finances in January, the highest level seen since 2000, has failed to trigger a Pound rally against the New Zealand Dollar.

Instead, the Pound has made only fractional gains against the NZD, owing to continued concerns about how the House of Lords debate on Article 50 will turn out.

Outside of the surplus news, the Pound has been unsettled by a volley of criticism directed against the Bank of England (BoE) by the Treasury Select Committee, which has taken aim at previous BoE forecasting as well as the decision to cut interest rates after the EU Referendum.

Other issue has come from the European Commission, where President Jean-Claude Juncker has stressed that the UK may end up paying dearly to leave the EU.

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GBP Forecast to Flop if GDP Stats Show Slowdown Tomorrow



The next major UK domestic data will consist of Wednesday morning’s second estimates for the Q4 GDP growth rate, along with statistics for business investment in the same period.

GDP is expected to remain at 0.6% on the quarter and at 2.2% on the year. For business investment, a quarterly stagnation is forecast alongside an expected rise from a negative range on the year.

Outside of this solid news, BoE officials Jon Cunliffe and Nemat Shafik are due to speak in the morning and the evening, respectively.

New Zealand Dollar Slumps after Heavy Drop in Dairy Prices



Dairy prices have contributed strongly to the recent New Zealand Dollar slump, with the Global Dairy Trade price index falling by -3.2% today.

Previously, the index rose by 1.3%, though historic growth has been weak, keeping the NZD in a state of turbulence whenever the results come out.

Elsewhere, signs that the US Federal Reserve could raise the interest rate in the near-term have further lowered confidence in the New Zealand Dollar.

NZ Credit Card Stats Incoming, Limited Data may Leave US Dollar as Main New Zealand Dollar Influence



The next direct New Zealand news will be Wednesday night’s credit card spending figures, which previously showed an annual rise of 8.5%.

With the only other major incoming data being Sunday’s visitor arrival figures, it may be worth watching the strength of the US Dollar instead, given how influential it is on the NZD.

Key US news will include new home sales and Fed minutes on Wednesday, as well as existing home sales stats on Friday.
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