Written by John Cameron on March 19th, 2012
The GBP NZD rapidly retraced back down towards the 1.9000 level following Wednesday’s brief spike upwards.
Foreign Currency Market Update – GBP / NZD Update
A very light schedule of New Zealand data releases last week left the Kiwi Dollar at the mercy of ebbs and flows in global investor sentiment. This caused considerable intra-week volatility for GBP NZD, with the pair touching a trading rate of 1.9426 last Wednesday, as market participants trimmed their exposure to risk following the release of the results of the US Federal Reserve’s latest stress test. Four major US banks, including corporate behemoth Citigroup, failed the test, suggesting that liquidity is a potential problem awaiting America’s banking sector.
However, the GBP NZD rapidly retraced back down towards the 1.9000 level following Wednesday’s brief spike upwards. The move was driven by the International Monetary Fund’s announcement that it would be releasing €28bn in emergency funding to debt-addled Greece. The ECB/EU had been waiting for the IMF to confirm this action before committing the next €130bn of Greek bail-out funding, so the development came as a relief to institutional investors, who rapidly regained their appetite for risk, causing a sharp forward move for the New Zealand Dollar.
The NZD ended the week on a firm footing, touching 1.9098 in the early hours of Friday morning, before weaker than anticipated US data releases on Friday afternoon took the steam out of the Kiwi’s rally. If Wednesday night’s key New Zealand Q4 GDP growth data prints at below the 0.6% quarterly figure expected, then there could be renewed downside for the New Zealand Dollar. This would bring the 10-week high of 1.9491 into view for GBP NZD. Alternatively, if Wednesday’s Bank of England minutes reveal further discussions from the nine-man committee about an extension to the Bank’s Quantitative Easing policy, then the mid-February low of 1.8634 will become a near-term target for the pair.
Summary of major upcoming data releases that we think may move the market.
- There has been considerable volatility for the GBP NZD exchange rate over the past seven days
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – Kiwi stabilises as stock markets rebound…
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – Sterling give back recent gains
- Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast
- New Zealand Dollar Foreign Currency Exchange Rate Forecast – Worse than expected contraction in the UK economy