Exchange Rate Forecast

Exchange rate forecasts and foreign currency news

Will the Pound manage to hold on to its recent gains?

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After hitting an 8-year low against the Euro in early August the GBP/EUR rate is now trading back in the same trading range it’s found itself it for long periods of time since the Brexit vote.
Sterling has also recovered roughly 50% of its losses against the US Dollar since the Brexit, and it’s even recovered all of its post-Brexit vote losses against some major currency pairs such as the New Zealand Dollar.

UK GDP data weakens the Pound

Earlier this morning the UK GDP figure for the year came out worse than expected by 0.2%, and this resulted in a weakening of the currency. The Governor of the Bank of England, Mark Carney on the other hand has offered the markets some positivity after once again hinting at an interest rate hike in the UK as soon as November. This is generally considered to be a positive and I expect to see the Pound climb higher if this talk materialises into reality.

Will the Pound’s value continue to rise?

Those hoping that the Pound will continue to climb should be weary that the Pound could drop suddenly should negative news emerge surrounding the Brexit, as this has the potential to negatively impact sentiment surrounding the UK economy moving forward.

Next week Manufacturing, Construction and Services data will all be released out of the UK, as well as a proposed Inflation Report hearing. All have the potential to move markets should the figures either impress or disappoint so these are worth following closely.

UK property prices

It’s worth watching property prices as this morning it emerged that London property prices fell for the first time since 2009. They fell by 0.6% and London property prices are the worst performing in the UK. It will be interesting to see whether this continues and how it impacts the Pound’s value. With a interest rate hike potentially on the cards falling property prices could be worrying for home owners, and may give the Bank of England some food for thought.

How could a FED interest raise impact GBPNZD rates?

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JMW-iwi-DollarThe 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.

Will GBPNZD Continue It’s Rise?

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The Pound has gained in relation to the New Zealand Dollar as of late, and this week could be important as to whether this trend continues.

JMW-iwi-DollarThe paired spiked last week as the RBNZ (the Reserve Bank Of New Zealand) reduced the official cash rate by 25bp to 2.25%, this move surprised the market and a look back at a 5 day chart makes that very clear, with GBPNZD spiking upwards and now trading within a new range of 2.12 – 2.15.

Economic news releases are limited this week in New Zealand, and I’m expecting tomorrow to be the highlight of the week as the Global Diary Auction is scheduled for release. When we consider that dairy products are New Zealand’s biggest export, I think the auction tomorrow has the potential to move pairs involving the NZD.

Commodity prices have staged a small recovery recently, some of course more than others, and New Zealand Dollar bulls as well as dairy farmers will be hoping that the recovery has spilled over into the dairy industry as well.

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