GBP NZD Exchange Rate Rallies after Fed Rate Hike Odds Damage NZD Demand

March 6, 2017 - Written by Tim Boyer

STORY LINK GBP NZD Exchange Rate Rallies after Fed Rate Hike Odds Damage NZD Demand

On Tuesday afternoon the British Pound to New Zealand Dollar exchange rate continued to trend with a downside bias despite a drop in price for New Zealand’s most lucrative commodity.

During the 07/03 Global Dairy Trade (GDT) auction, dairy prices dropped by -6.3% and hit their worst levels since October 2016, which could dampen demand for the commodity-correlated ‘Kiwi’ for the rest of this week.

[Previously updated 06/03/2017]

GBP NZD Advance seen despite Jitters ahead of Spring Budget

The Pound has risen by 0.4% against the New Zealand Dollar today, though this advance comes ahead of potential high turbulence on Wednesday.

Overall GBP movements have been negative owing to uncertainty about what the Spring Budget will hold; the GBP NZD rise is only by virtue of a surprise New Zealand Dollar crash.

The general forecast has been for a cautious budget delivery from Chancellor Philip Hammond on Wednesday, owing to the looming threat of Brexit volatility after Article 50 is triggered.

GBP NZD Exchange Rate Predicted to Slide if Budget brings More Cuts

The March budget on Wednesday is expected to dominate Pound movement on Tuesday and Wednesday, given that it will be the only such event of the year after the Autumn Statement was scrapped in 2016.

Although some positive outcomes have been predicted, such as a sizable sum being spent on social care and possible help for businesses struggling with rising rates, the general picture is a fairly gloomy one.

As well as there being no end in sight to austerity, the Pound may also be weakened if it looks like more crippling cuts will be implemented ahead of Brexit-based turbulence.

NZD Demand Crashes as Fed Rate Hike Odds Top 86%

The New Zealand Dollar has recorded extremely heavy losses today, falling against the Pound and all its other currency rivals due to Federal Reserve news.

Following remarks from Fed Chair Janet Yellen on Friday, the NZD fell heavily, given that Yellen called a near-term US rate hike ‘appropriate’, assuming that present economic conditions remained supportive.

The odds of a Fed rate hike in March have since risen to over 86%, when their highest previous point was around 66% in the previous week.

The drop on Fed news has put the NZD down to its lowest level in 2017, though a Fed rate hike could set a new low for the year.

NZD Forecast to Rally if Incoming Dairy Data Shows Price Rise

The New Zealand Dollar is expected to rally against the Pound on Tuesday if the Global Dairy Trade price index rises; it previously showed a damaging drop in dairy prices of -3.7%.

The rest of the week is not expected to be packed with major NZ news, which might leave positively predicted US jobs figures on Wednesday and Friday as greater negative influences on the NZD.

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