The following report looks at factors that may impact GBPNZD exchange rates this week.
The Reserve Bank of New Zealand has given notice that it will issue a brief economic statement on the 21st July even though the next policy review is meant to be Thursday 11th August. This has led to speculation that there could be further interest rate cuts coming. Due to the unexpected announcement traders are believed to have priced in a 60% chance of a cut. This will go a long way to explaining why the GBP/NZD rate started yesterday at 1.80 and has already reached a high of 1.883 today.
The RBNZ previously cut rates back in March and that came as a shock to many investors. The rate currently sitting at 2.25% was expected to be cut once more this year but there was little indication in the April and June meetings that it was coming so soon.
The housing market in New Zealand and especially Auckland is currently on the charge with major foreign investment flooding in. If there was to be a rate cut, domestically that would arguably only make the problem worse as it makes it even cheaper to purchase property through a mortgage. Alternatively the cost of exports being so high with a strong NZD is having an effect on the inflation level preventing the RBNZ achieving their mandate of 1-3%.
If you’re looking to sell NZDs it would be sensible to get in contact with your broker, if the announcement next week does include a rate cut I believe it could take the exchange rate back over the 1.90 mark. Even with the sudden weakness for the NZD, the rate is still at levels last seen over 3 years ago, therefore acting quickly could help you still achieve the best deal.
If youre unsure as to when the best time to make an exchange is, why not call our brokers today on 01494 725 353. We are open until 5pm today to discuss your currency requirements.
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