The GBP NZD exchange rate slipped to 1.9368 as last week’s session drew to a close; this represented the pair’s lowest level since the 21st August.
Foreign Currency Market Update – GBP / NZD Update
The GBP NZD exchange rate slipped to 1.9368 as last week’s session drew to a close; this represented the pair’s lowest level since the 21st August. The downwards dip was provoked by a bout of strong support for the Kiwi Dollar following the US Federal Reserve’s announcement late on Thursday that it was set to ramp up its printing presses once again in order to fund another extensive bout of Quantitative Easing. America’s central bank revealed that it would be releasing US$40bn of new money into the markets on a monthly basis, via the purchase of mortgage-backed assets, for the foreseeable future. The news brought an immediate response from equities markets, with the world’s leading share indicies soaring as the weekend close approached. The return of a ‘risk-on’ trading environment benefitted the New Zealand Dollar, sending GBP NZD to its lowest level for over three weeks.
However, by the time European traders got back to their desks yesterday morning, the mood in the markets was already beginning to deteriorate. Yesterday’s revelation from US President Barack Obama that he had lodged an official complaint with the World Trade Organisation regarding the payment of subsidies by China’s government to companies in the nation’s domestic car manufacturing sector, sparked fears that the ongoing trade dispute between the US and China might be set to escalate. The mere possibility of such a scenario unfurling caused appetite for risk to ebb from global markets, causing a weakening in world share indicies and triggering a move out of the New Zealand Dollar which sent the GBP NZD exchange rate briefly back through the 1.9700 during last night’s Asian session.
Tomorrow could well prove to be a market-moving day, with the release of the minutes of September’s Bank of England monetary policy committee meeting. If the minutes reveal that the nine-man committee actively discussed more QE for the UK, then Sterling is likely to experience a broad sell-off. The latest GDP growth data for New Zealand’s economy is set for publication later tomorrow. The Q2 numbers are expected to show a pronounced drop-off from the counterpart Q1 showing of 1.1% growth. If the figure registers at close to 1.1%, then the Kiwi Dollar is sure to be well-supported, bringing 7th August’s key interim floor of 1.8962 into view.
Summary of major upcoming data releases that we think may move the market.
- Pound to Euro Exchange Rate Forecast: The Pound slipped below 1.2500 for the first time in over 2 months
- Pound to New Zealand Dollar Exchange Rate Forecast: The Pound declined by 2.5 cents against the New Zealand Dollar
- Pound to New Zealand Dollar Exchange Rate Forecast: The Pound reached a two-week high of 1.9652 against the New Zealand Dollar
- The Pound slipped against the U.S Dollar exchange rate and the Yen
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast