Pound to New Zealand Dollar (GBP/NZD) Relatively Static as Investors Await Central Bank Statements

Modified: Thursday, 11 June 2015 10:11 BST - Written by Frank Davies

STORY LINK Pound to New Zealand Dollar (GBP/NZD) Relatively Static as Investors Await Central Bank Statements

GBP/NZD Exchange Rate Little Changed before RBNZ Decision

The Pound remained in a narrow range against the ‘Kiwi’ on Wednesday as investors placed their bets for the outcome of central bank actions. The Reserve Bank of New Zealand is due to announce its interest rate decision late on Wednesday and the event is likely to cause some major market movement. There have been weeks of speculation regarding the Kiwi central bank and investors expect a cut in the benchmark rate at some point in the near future after weaker economic data. However, the jury is still out and mixed opinions continue to flood the market.

Dealer Grant Bodle stated: ‘I think they won’t cut. It would add too much fuel to the property market, which is what they’re trying to avoid. If they cut you’ll see the ‘Kiwi’ sold off again, and if they don’t which is what we’re picking, I would expect a 30 to 40 point bounce.’

Overnight, the New Zealand Card Spending figure rose by 1.4% on the month in May. Additionally, Retail Card Spending jumped by 1.2% instead of the 0.9% expectation.

Industry expert Neil Kelly stated: ‘Spending rose in five of the six retail industries. Fuel spending had the largest rise, continuing a recent run of increases, but is still below the levels seen before the price falls of late last year.’

Dairy Prices Undermine NZD Demand

Meanwhile, the ‘Kiwi’ exchange rate was also offered little support from falling dairy prices in recent weeks. As New Zealand’s largest export is dairy, any price changes can have a massive impact on the ‘Kiwi’. Over in the UK the Pound was offered some support on Wednesday when upbeat UK industrial sector figures emerged. The month of April boasted a 0.4% expansion, allowing the annual figure to climb from a positively revised 1.1% to 1.2%. Meanwhile, the UK’s manufacturing sector registered a -0.4% contraction in April which pressured the annual ecostat to 0.2% from the former 1.2%.

NZD/GBP Fluctuates on UK GDP Data

Additionally, the UK’s latest GDP estimate came in at 0.6% in May, after April’s ecostat was upwardly revised to 0.5%. Bank of England Governor Mark Carney is expected to speak later on Wednesday which could influence the Pound significantly. In the past, hawkish remarks have caused a Pound exchange rate rally. Conversely any negative statements from the central bank have pressured the UK currency lower.

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TAGS: Currency Predictions New Zealand Dollar Forecasts Pound Ne Forecasts