Gains Forecast for Pound Sterling NZD vs New Zealand Dollar NZD and Euro EUR

March 12, 2015 - Written by John Cameron

STORY LINK Gains Forecast for Pound Sterling NZD vs New Zealand Dollar NZD and Euro EUR

This afternoon’s session saw the euro (currency:EUR) slump to its lowest level for some 12 years against the US Dollar (currency:USD) as investors moved en masse out of the single currency.

In a similar vein, the Pound Sterling euro exchange rate spiked to its highest level since 2007, touching 1.4257 GBP EUR during early trading. The pair had started the week at 1.3877 when this week’s session in the currency markets began on Sunday night, so the spike forward has been a pronounced one for Sterling.

The concerted move out of euro-denominated assets was driven by the commencement of the European Central Bank’s Quantitative Easing programme on Monday – the scheme will see the euroland’s reserve bank buy up some €1.14tn worth of sovereign debt over the next eighteen months and by the law of supply and demand, this is likely to see the euro continue to soften in the markets.

Comments from Mario Draghi, the ECB President, earlier today re-enforcing his strong commitment to getting the euro area’s level of inflation back up to its target level, was taken by market participants as a sign that Europe’s Quantitative Easing programme may be extended beyond Autumn 2016, when it is currently scheduled to finish. Draghi stated earlier that,
‘We can deploy and we will deploy monetary policy in a way that can and will stabilize inflation in line with our objective.’

Looking ahead, the main overnight risk event of note this evening comes in the form of the Reserve Bank of New Zealand’s latest monetary policy announcement. Any alteration to the RBNZ’s current benchmark interest rate of 3.5% is considered unlikely by analysts, but the statement which accompanies the New Zealand central bank’s decision is likely to trigger price action for the Pound Sterling vs the Kiwi. RBNZ Governor Graeme Wheeler has been clear in his desire for a weaker local unit during recent months, so expect this evening’s statement to allude to the difficulties caused to the New Zealand economy by the continued recent drift in global commodity prices.

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