Gains Predicted For GBP NZD Exchange Rate On Dairy Price Forecast

Modified: Wednesday, 28 May 2014 09:53 BST - Written by John Cameron

STORY LINK Gains Predicted For GBP NZD Exchange Rate On Dairy Price Forecast

The Pound Sterling opened today’s session firmly on the back foot following a forecast from Nationwide Building Society’s Chief Executive Graham Beale that the UK housing market is likely to endure a ‘natural correction’ during coming months. Beale opined that the London property market, which is already showing signs of overheating, is likely to lead the fall which has the potential to spread to other parts of the UK.

The news may well please Bank of England policymakers who have expressed their concerns that a new property bubble is forming following the introduction of the British coalition government’s ‘help to buy’ scheme, which enables potential homeowners to get on the property ladder even if they only have a 5% deposit available.

However, currency market participants viewed the development as bad news for the Pound and the Sterling euro exchange rate slumped to 1.2304 GBP/EUR in response. The pair briefly breached the 1.2370 threshold during the latter part of last week’s trading session as investors fretted over the potential effect which a loosening of its monetary policy by the European Central Bank might have on the single currency. The forward move for the euro Sterling exchange rate EUR/GBP came in spite of disappointing German import, export and job creation data, published first thing this morning.

Meanwhile, the announcement from leading New Zealand dairy cooperative Fonterra that it is downwardly revising its forecast for future wholesale milk prices for the coming season ensured that the Sterling New Zealand Dollar exchange rate climbed by over half a percentage point to touch 1.9742 GBP/NZD during early trading. The announcement spells bad news for the Kiwi economy, which has shown strong signs of recovery during recent months thanks to the positive multiplier effect which the rebuilding of Christchurch following the 2010 earthquake has had on economic activity. Further gains are now predicted for the Pound New Zealand Dollar exchange rate GBP/NZD.

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TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts New Zealan Forecasts