Having strengthened following the last interest rate decision meeting where it looked like the RBNZ (Reserve Bank of New Zealand) would raise interest rates in the future, this week’s decision is very important for GBPNZD rates. The expectation is a much better opportunity for those buying New Zealand Dollars with Pounds providing some respite after a difficult week last week which saw the Kiwi gain 5 cents on the Pound.
The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last week.
|Currency Pair||% Change||Difference on £200,000|
At the last meeting it looked like the RBNZ were shifting to a more hawkish (strong) stance towards policy, but it now appears they are going to be more dovish (soft). The raising and lowering of interest rates is key to a currency’s relative strength or weakness, Wednesday’s data will be the weeks' most important event for NZD. If you need to buy or sell being prepared is vital to getting the best rates.
The reason the RBNZ would be more dovish is because of some slightly worse than expected employment data last week which showed an unexpected decrease in the number of employed people. With GDP growth having been fairly strong through this period we might have expected a stronger improvement from the labour data. The New Zealand Interest rate decision is due Wednesday evening around 10pm UK time. This means if you have a transfer to make buying or selling New Zealand Dollars getting in touch before during the day is key.
If you are buying New Zealand Dollars waiting for Wednesday’s interest rate decision might be wise to see just how it pans out otherwise there are other pieces of data from China which might help Kiwi sellers. With the pound likely to remain under pressure and longer term forecasts still leaving the door wide open to GBPNZD testing the lows of sub 1.70 it looks like the market will overall favour NZD sellers. A well timed sale of 300,000 NZD last week would have netted you an extra £4000 if traded at the best rates.
The most important Chinese data is tomorrow morning, again an early release so those interested in GBPNZD should be making plans sooner. The data is for Trade Balance figures and with the expectation China’s Trade Balance has increased, this would help the Kiwi. The NZD benefits from its strong trade relations with China, when the Chinese economy does well it helps the NZD strengthen.
Looking at the week ahead if you need to sell New Zealand Dollars, doing so before Wednesday on the current improvements seems wise, possibly after the Chinese data tomorrow. For more information on the best time for your GBPNZD trades please speak to your account manager here. You can call our trading floor on 01494 725 353 or email me here.
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