The New Zealand dollar has weakened against the Pound as amongst a number of commodity currencies with the odds of a FED hike improving.

Whilst a FED hike will not compete with higher rates of return from commodity currencies such as the New Zealand Dollar or Australian Dollar, the US Dollar enjoys a safe-haven status which investors prefer when it comes to long term investment.

The reason behind the weakening of the NZD is down to a speech by Boston Fed Reserve Bank’s Eric Rosengren last Friday suggesting a FED hike in September is still alive, putting odds at 30%. With the improvements in the US economy specifically around employment and wage growth, this could well be a possibility for Janet Yellen of the FED.

With a FED interest rate raise on the table I expect this to influence GBPNZD exchange rates as we approach next week, and if one does arise I expect commodity currencies to take a hit, resulting in further climbs in GBPNZD.

Across the board, if you are looking to buy foreign currency, pay particular attention to the Bank of England’s interest rate decision on Thursday. Although it has only been a month since they last cut rates, any news of further intervention or a negative tone from Mark Carney could put the Pound under further pressure.

Will GBPNZD exchange rates continue to strengthen?

With the US elections now only 2 months away, I am expecting the Pound to benefit short term from movements in the market. This does depend in some form, the outcome of next week’s FED interest rate decision. With Brexit still the number one concern for the UK economy, 2017 could see some further slides in the Pound’s value.

If you are buying New Zealand Dollar’s in the near future, I would look at doing so between now and the end of 2016. With the US elections and FED hikes still at play, opportunities are there, but could be time sensitive.