British Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Drifts Up; RBNZ Rate Decision Looms
With the Reserve Bank of New Zealand due to deliver its rate decision tomorrow, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trading in the region of 1.9685, up 0.10% on the day’s opening levels.
If you're looking to make an international money transfer, we recommend TorFX.
Economic reports for New Zealand were limited overnight and only incremental ‘Kiwi’ movement was occasioned by comments from the RBNZ’s Deputy Governor Grant Spencer.
Spencer stated that the central bank will be introducing streamlined banking regulations by September next year. During his speech Spencer commented; ‘Our aim here is not to fundamentally change or roll back the regulatory framework. We want to shape and thin the stock of regulation, not undertake a major reformulation of the system.’
The Pound to New Zealand Dollar exchange rate opened the European session in a slightly stronger position and managed to retain the upper hand as trading progressed.
The US Dollar to New Zealand Dollar (USD/NZD) exchange rate was also able to advance ahead of the release of the US Consumer Price Index for June.
Economists have forecast that US CPI came in at 2.1% last month, year-on-year, unchanged from the annual figure recorded in May (which was the fastest pace of inflation recorded since October 2012).
If the data should come in at forecast levels, or even surprise to the upside, the odds of the Federal Reserve increasing interest rates would rise and the US Dollar could be boosted.
In the view of industry expert Tim Kelleher; ‘If US CPI ticks up there could be a significant move up in the US Dollar.’
The Pound to New Zealand Dollar (GBP/NZD) exchange rate was also able to climb on the strength of expectations that if the RBNZ introduces an interest rate increase tomorrow, it might be the central bank’s last for 2014.
Given that dairy prices have been falling, geopolitical tensions have been rising and the pace of inflation in New Zealand has slowed, many industry experts believe that now might be the right time for a break in the RBNZ’s rate hiking cycle.
If rates are increased tomorrow it will be the fourth hike this year.
According to strategist Greg Gibbs, the RBNZ ‘may decide to hint at a pause after significant rate rises this year and a stronger NZD. If it references the currency is this way (linking it to a lower rates profile) it may cause a modest further weakening in the NZD. It is possible that they pause from tightening this week although we think this is unlikely. The market is already pricing rates largely on hold until Q1 next year’.
With UK second quarter growth data due out at the end of the week and the minutes from the last Bank of England policy meeting scheduled for publication tomorrow, the prospect of additional Pound to New Zealand Dollar (GBP/NZD) exchange rate movement taking place before the week is out is high.
Today’s UK Public Finance and Confederation of British Industry Business Optimism figures had little impact on the Pound.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trading in the region of 1.9669.