Losses may Grow for Pound Sterling New Zealand Dollar Exchange Rate if 'Brexit' Continues to Trouble Investors

April 6, 2016 - Written by John Cameron

STORY LINK Losses may Grow for Pound Sterling New Zealand Dollar Exchange Rate if 'Brexit' Continues to Trouble Investors

The Pound has managed to scrape a gain against the New Zealand Dollar today, although this is only because of the US Dollar pushing NZD down. GBP remains vulnerable to market shocks, which are in abundant supply due to UK Referendum news.

The Pound has been low against the 'Kiwi' today, and may continue to be in the future due to renewed concern over the future of the UK in the EU and the UK's steel industry to boot.

Rising Dairy Prices Caused GBP/NZD Exchange Rate to Soften

The New Zealand Dollar (currency : NZD) posted a positive performance during yesterday’s session thanks to a go-ahead set of results from the fortnightly online GlobalDairyTrade auction. The Pound Sterling New Zealand Dollar exchange rate dropped from an intraday high of above the 2.1000 GBP NZD threshold back down into the 2.0700s as average winning price at the auction increased by a healthy 2.1% compared to last time around.

The New Zealand economy remains heavily dependent on the shipment of Whole Milk Powder (WMP) to its number one export market, China, so the news that the fetching price of WMP had increased by 1.5% to an average price of $2,013 provided the Kiwi Dollar with a significant fillip.

However, analysts warn that the gains for the NZD triggered by yesterday’s results are by no means guaranteed to stick.

Leading dairy collective Fonterra’s Chief Executive Theo Spierings noted in the wake of the results that, ‘the balance between available dairy exports and imports has been unfavorable for 18 months following European production increasing more than expected and lower imports into China and Russia.’ He went on to observe that, ‘this imbalance is likely to continue in the short term, with prices expected to lift later this calendar year.’

NZD Exchange Rates Predicted to Register Significant Gains

Elsewhere, the generalised ‘risk off’ trading environment on the day yesterday, which saw global stock markets give up ground, had the diametrically opposite effect on the export-driven New Zealand Dollar. London’s benchmark FTSE 100 closed down by 1.19%, while the euroland’s bourses shed an even greater amount, with the Dow Jones Eurostoxx 50 incurred a hefty loss of 2.43% on the day.

Analysts forecast that, in spite of the negative performance for equities, the New Zealand Dollar may well register significant gains in coming sessions thanks to the encouraging GlobalDairyTrade auction results. Such a trot of events has the potential to send the Pound Sterling New Zealand Dollar exchange rate back down below the two to one threshold.

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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts Poun Forecasts