New Zealand Dollar Forecasts: GBP to NZD Exchange Rate Firm After Recovering From BoE Minutes & Australian Inflation

October 22, 2014 - Written by Tim Boyer

STORY LINK New Zealand Dollar Forecasts: GBP to NZD Exchange Rate Firm After Recovering From BoE Minutes & Australian Inflation

The British Pound to NZ Dollar (GBP/NZD) exchange rate recorded losses on Wednesday as the New Zealand currency gained off the back of favourable Australian data.

Meanwhile, Sterling weakened when the Bank of England (BoE) meeting minutes revealed that there was no change from the previous two meetings in the divergence of votes between policymakers.

A quick look at the latest conversion rates today:

The Pound to New Zealand Dollar exchange rate today converts +0.1 per cent higher at 1 GBP is 2.02423 NZD.
The Euro to New Zealand Dollar exchange rate is -0.07 pct lower with a conversion rate of 1 EUR equals 1.59461 NZD.
The US Dollar to New Zealand Dollar exchange rate today is converting +0.48 per cent higher at 1.26122 USD/NZD.
The Aus Dollar to NZ Dollar exchange rate today converts +0.59 per cent higher at 1 AUD is 1.10706 NZD.

Don't forget if you are waiting to find better exchange rates for a international payments, then you're best bet is to set up your future rate order with a foreign exchange broker.

Pound to NZ Dollar Rate Today: BoE Minutes Pressure GBP/NZD

Sterling is highly sensitive to interest rate talk.

Previously, investors were largely expecting a hike this side of Christmas which caused a Pound rally.

However, as investors readjust their bets, Sterling softens.

The timeframe for the first increase in borrowing costs was extended from November, into the first quarter of 2015 as the Bank of England suggested spring was more likely.

Moreover, recent weeks have seen speculation that the central bank may keep rates on hold for longer mount.

The UK general election takes place in May and it seems unlikely the central bank will do anything to upset stability until the summer.

Furthermore, recent statements by BoE Chief Economist Andrew Haldane pressured the Pound lower and saw investors reassess their interest rate bets.

Haldane commented that the chance of an interest rate hike in the first half of 2014 was unlikely.

He said: ‘Put in rather plainer English, I am gloomier.’

However, today’s minutes show that there is still a clear divide between policymakers, with 7:2 believing that the UK economy isn’t in a position to hike interest rates.

The pace of UK inflation unexpectedly fell last week, causing fear amongst investors that the UK economic recovery was faltering.

Many economists suggest that Eurozone weakness is playing a large part in the BoE continuing to enforce their historic low 0.5% bank rate.

The meeting minutes stated: ‘For most members, there remained insufficient evidence of prospective inflationary pressure to justify an immediate increase in Bank Rate. CPI [Consumer Price Index] inflation was 1.2% in September, partly reflecting lower import prices.’

New Zealand Dollar Strengthens from Australian Inflation

The New Zealand Dollar (NZD) gained when close neighbour Australia saw a better-than-forecast third quarter inflationary figure.

Australian Consumer Prices rose by 0.5% in third quarter, bypassing economists 0.4% forecast.

Trader Michael Johnston commented: ‘We had Australian inflation numbers today which, on balance, were slightly higher than expected.’

However, New Zealand is scheduled to release its own Consumer Price Index on Wednesday which is expected to see inflation fall from 1.6% to 1.2% on the year in quarter three.

Despite the ‘Kiwi’ gaining from both Chinese and Australian figures this week, the release of weaker inflationary levels within the New Zealand economy may drag the commodity currency lower.

If inflation has fallen, hopes for an interest rate increase by the Reserve Bank of New Zealand (RBNZ) will remain muted.

The NZD made gains against the USD this week; however, a drop in inflation could see it lose ground to the American Dollar.

Forex expert Tim Kelleher commented: ‘The risk is we will see the ‘Kiwi’ lower by the end of the week – it doesn’t mean it can’t go back to 80 [US] cents first though.’

The NZD GBP exchange rate is likely to remain bullish until the release of the NZ inflation data as Sterling sinks on diminished interest rate hike hopes.

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