Since markets reopened for a new week of trading, the Pound has been through the mill against the New Zealand Dollar. On Tuesday the Pound was faring well against the ‘Kiwi’ and many of its other peers having previously tumbled due to the latest ‘Brexit’ polls.
The New Zealand Dollar, meanwhile, has been on a strong footing as well, thanks partly to small improvements in the national dairy industry.
The Pound started the week against the New Zealand Dollar with a dive to 2.0728, before advancing to a high of 2.1052.
Pound Pressured by Worst ‘Brexit’ Poll Result So Far
Yesterday brought very little in the way of positivity for the Pound, which fell across the board on account of the latest EU Referendum polling stats.
Although previous months had put the ‘Remain’ camp firmly in the lead, the latest poll results showed that the ‘Leave’ group actually had a greater percentage of supporters.
The news sent Sterling into a sharp state of decline amid fears that a jump into the unknown associated with a ‘Brexit’ vote would seriously, and perhaps irreparably, damage the UK’s economy.
More recently, however, the Pound has been able to completely reverse its staggering losses and rise by considerable amounts against the New Zealand Dollar and other majors.
These gains are thought to have been brought about in part by corrective trading, which stemmed from the Pound being inadvertently traded overnight during the Asian session.
Additionally, the latest YouGov poll has put the ‘In’ vote at 43%, compared to the 42% assigned to the ‘Out’ campaign.
New Zealand Dollar Supported by Dairy News and Fed’s Continued Uncertainty
The ‘Kiwi’ has been a safe option for the most part of late, thanks to both domestic and foreign economic news.
In the former case, the price of class 3 milk per hundredweight has risen steadily since mid-May and currently stands above a monthly high. In addition to this, Synlait Milk, a national dairy company, has issued a statement that it expected to pay farmers that supply it an increased amount this season despite the general struggles faced by the industry.
Elsewhere, the latest comments from Fed Chair Janet Yellen have linked an increasing likelihood of a ‘Brexit’ with decreased chances of an early interest rate hike. This makes it seem likely that the ‘Kiwi’ will advance if the ‘Leave’ campaign appears to be doing particularly well.
GBP/NZD Exchange Rate Forecast
For the rest of the week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of tonight’s New Zealand Q1 manufacturing activity, tomorrow’s UK manufacturing and industrial production stats for April, the Reserve Bank of New Zealand interest rate decision, which is also due tomorrow, and Friday’s RBNZ Governor speech and UK April trade balance.
Broadly speaking, UK industrial production is expected to worsen, manufacturing production is forecast to improve, the RBNZ has a rate freeze on the cards and the UK’s trade deficit is forecast to widen.
Heads Up
Summary of major upcoming data releases that we think may move the market.