Pound to New Zealand Dollar Exchange Rate Slides despite RBNZ Official Interest Rate at All-Time Low

May 8, 2019 - Written by John Cameron

STORY LINK Pound to New Zealand Dollar Exchange Rate Slides despite RBNZ Official Interest Rate at All-Time Low

The Pound Sterling New Zealand Dollar exchange rates fell and the pairing is currently trading at an inter-bank rate of NZ$1.9761.

The Reserve Bank of New Zealand (RBNZ) cut its official interest rate to an all-time low.

A weakening job market and disappointing inflation caused the central bank to slash interest rates from 1.75% to 1.5%.

It has been suggested that this is not going to be the last interest rate cut seen this year.

Commenting on this, Economist at Capital Economics, Ben Udy said:

‘Subdued economic growth and a softening labour market means that today’s interest rate cut by the RBNZ will be repeated before the year is out.

‘An acceleration in GDP growth in the first quarter may stave off another rate cut for the next few months, but as unemployment rises and growth remains subdued in the second half of the year, we think the bank will cut rates to 1.25% in November.’

New Zealand Dollar (NZD) Exchange Rates Rise despite Heightened US-China Trade Tensions

On Wednesday, reports emerged suggesting that China has backtracked on nearly all aspects of the US-China trade agreement.

Beijing made reversals undermining core US demands, revising its commitments on key issues such as forced technology transfers and theft of US intellectual property and trade secrets.

An anonymous private sector source stated:

‘China reneged on a dozen things, if not more […] The talks were so bad that the real surprise is that it took Trump until Sunday to blow up.

‘After 20 years of having their way with the US, China still appears to be miscalculating with this administration.’

However, the New Zealand Dollar continued to rise against Sterling despite the heightened trade tensions.

Sterling (GBP) Exchange Rates Slump on Fresh Wave of Brexit Pessimism

UK like-for-like retail sales rose to a higher-than-forecast 3.7% in April, suggesting that households were becoming less worried about Brexit.

The British Retail Consortium (BRC) revealed that UK consumers splashed out at restaurants and bars.

However, this was at the expense of retailers, with shops failing to meet expectations over the Easter holidays.

Meanwhile, on Tuesday it was announced the UK would be participating in the European Parliament elections.

This likely dampened sentiment in the Pound as it suggests Brexit cross-party talks are not progressing successfully.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Outlook: Will the GBP/NZD Exchange Rate Rise on Better than Expected UK GDP?

Looking ahead to Thursday, the New Zealand Dollar (NZD) may rise against the Pound (GBP) following the release of the business NZ PMI.

If April’s business PMI edges up higher than expected, it could provide the ‘Kiwi’ with an upswing of support.

On Friday, the Pound could claw back some losses following the release of the Q1 2019 preliminary GDP.

If UK GDP rises higher than forecast, the Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate could rise.

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TAGS: Pound New Zealand Dollar Forecasts