Pound to New Zealand Dollar Forecast – The GBP NZD rate has held above last Wednesday’s near-term low of 1.9041

Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast - The GBP NZD rate has held above last Wednesday’s near-term low of 1.9041With the Pound seemingly down on its uppers, thanks to the tame nature of recent UK data releases, clients needing to purchase NZD in the near-term will be hoping for a weakening of the NZD.

By John Cameron

Foreign Currency Market Update – GBP / NZD Update

The GBP NZD exchange rate dipped to 1.9041 on January 18th, its lowest level since September last year. The move coincided with a sharp forward move for global equities markets which began on 19th December and ran out of steam in the middle part of this month. Share markets traditionally enter an uptrend in the latter part of December in anticipation of fresh investment by institutional investors in January. Such a move is commonly referred to as the ‘Santa Claus Rally’. This year’s Santa Rally caused the benchmark SP 500 share index to accumulate by 10% from 19th December to the middle part of this month, signalling the return of a ‘risk-on’ trading environment. This sent the risk-sensitive, commodity-export driven NZD higher against the majority of the other sixteen most-actively traded currencies. The GBP NZD rate has held above last Wednesday’s near-term low of 1.9041, setting it as a significant level of resistance in this market.

Last Week

Last week’s fundamental UK data releases were far from encouraging, placing additional pressure on the Pound. The government’s official unemployment figures, released last Wednesday, showed that joblessness has risen to a seventeen-year high of 2.68m.

The Ernst Young ITEM Club further turned the knife into Sterling later in the week, with the release of a report which predicted that the UK’s fragile economy is about to slip into recession once again. The ITEM Club is a respected independent think tank which uses the UK Treasury’s forecasting model to make predictions on the future direction of the British economy. The report predicted that the UK economy shrank in the last three months of 2011 and is set to contract once again in the first quarter of 2012, making grim reading for clients needing to sell Sterling.

Meanwhile, last week saw domestic inflation data released in both the UK and New Zealand. Tuesday’s UK CPI Inflation figure for December showed that British prices are increasing at 4.2% versus November’s counterpart figure of 4.8%. This was in line with market expectations, so had little effect on the Pound. Wednesday’s New Zealand quarterly inflation numbers for the last three months of 2012, showed a pronounced dip in the rate of price rises from 4.6% in Q3 to 1.8% in Q4. The quarter four number was significantly lower than analysts’ predictions of a 2.6% print, a factor which is likely to weigh on investors’ expectations of a New Zealand interest rate hike any time soon.

Heads Up

*Denotes the importance of the data item *** being the highest level.

***Preliminary estimate of Q4 GDP is out on Wednesday (09:30) with markets looking for a 0.1% contraction quarter on quarter, and 0.8% annualised growth
**Bank of England minutes from the last meeting are out at the same time as the GDP data. The market will be looking for any changes in the panel’s interest rate bias and comment on the size of the asset purchase facility (otherwise known as quantitative easing).

***Reserve Bank of New Zealand Rate Decision on Wednesday at 2000hrs GMT
**NZ Trade Balance Figures for December at 2145hrs, Wednesday

Outlook

With the Pound seemingly down on its uppers, thanks to the tame nature of recent UK data releases, clients needing to purchase NZD in the near-term will be hoping for a weakening of the NZD in order to take the GBP NZD exchange rate higher.

Such a situation could be elicited by a sharp drop in global stock markets caused by a scaling back of appetite for risk by global investors, which would severely hamper the Kiwi Dollar’s progress. If Iran steps up its threat to disrupt global oil supplies following this week’s announcement by EU Foreign Ministers that they were set to impose an embargo on the Iranian oil industry, then risk could once again be off the menu.

Likewise, a continuance of the debt stand-off between the eurozone Finance Ministers and Greece’s creditors regarding the terms of any potential settlement, would also have the potential to send stock markets lower and the NZD weaker.

The Reserve Bank of New Zealand is expected to announce that it is maintaining its key lending rate at 2.50% tomorrow night. A surprise cut would lead to pronounced downside pressure on the Kiwi Dollar, bringing the 2.0000 level back into view for the GBP NZD exchange rate.

Related posts:

  1. Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – Kiwi stabilises as stock markets rebound…
  2. Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – Sterling give back recent gains
  3. Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast – The Kiwi dollar rallied 5% in October
  4. Pound Sterling to New Zealand Dollar Foreign Currency Exchange Rate Forecast
  5. New Zealand Dollar Foreign Currency Exchange Rate Forecast – Worse than expected contraction in the UK economy

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/QO9ftLPTDtM/

Leave a Reply

WP Facebook Auto Publish Powered By : XYZScripts.com
Bunk Beds