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GBP NZD Exchange Rates Fluctuate Before UK GDP

October 23, 2017 - Written by Frank Davies

The Pound New Zealand Dollar exchange rate predominantly fluctuated today with markets waiting for Wednesday’s UK GDP release and announcements regarding cabinet positions from New Zealand’s Prime Minister, Jacinda Ardern.

NZD Exchange Rates Stabilise Ahead of Cabinet Position Announcements



The ‘Kiwi’ caught some air today, steadying in its recent fall as markets prepared for new Prime Minister Jacinda Ardern’s announcement regarding cabinet position portfolios.

Ardern announced last week that she would be using the weekend to allocate portfolios to her list of ministers, asserting that this would involve discussions with New Zealand First.

With Monday being a public holiday, however, the announcement is due to take place later in the week.

The market reaction to news that Ardern won the leadership bid has, until now, been negative, with investors worried that the shift from 9 years of National leadership to a Labour / New Zealand First coalition might involve a great deal of economic change.

In this respect the NZD will likely remain volatile for an extended period of time, with markets waiting to see exactly how well New Zealand will react to various policy changes.

GBP Exchange Rates Fluctuate amid Talks of Brexit Progress



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The Pound has begun the trading week fluctuating, with markets still digesting news from last week that Brexit negotiations were progressing and that EU leaders had been given the green light to go ahead with internal trade talk preparations.

At first sight this news seems positive, but it bares mentioning that London is still refusing to show its hand by revealing a final ‘divorce’ bill sum, and the EU is continuing to refuse to begin trade talks until a divorce sum is agreed upon – even if they are ‘preparing internal talks’.

Nonetheless, EU Council President Donald Tusk has insisted that progress has been made; news that has driven some investor hope to return to the Pound.

Tusk stated:

‘After Prime Minister May's intervention last night and our discussion about Brexit this morning my impression is that the reports of the deadlock between the EU and the UK have been exaggerated and while progress is not sufficient it doesn’t mean there’s no progress at al’.

GBP NZD Forecast: UK GDP and BoE Rate Hike Prospects



The Pound could lose some ground against the New Zealand Dollar on Wednesday, depending on the outcome of the UK’s gross domestic product estimates.

GDP in the UK is forecast to remain steady year-on-year at 1.5% and quarter-on-quarter at 0.3%. If it prints below forecast - like last week’s disappointing UK retail sales and wage growth figures – however, then the prospect of a November rate hike from the Bank of England (BoE) will further diminish.

Markets have already begun to price in the possibility that the Monetary Policy Committee (MPC) will shift away from a rate hike this year, instead opting for caution until the UK’s domestic data proves slightly more positive.

Whilst inflation in the UK remains soaring at 3%, wage growth and retail sales have both failed to keep up – leaving markets unsure if the Bank will move for a rate hike.

If the GDP release proves stable then the GBP NZD exchange rate could gain even more ground, if it drops, however, then the ‘Kiwi’ could claw back some losses.
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TAGS: Currency Predictions Pound New Zealand Dollar Forecasts

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