Pound New Zealand Dollar (GBP/NZD) Exchange Rate Bolstered After RBNZ Rate Hike

(Updated 16:40 24/11/21)

The Pound New Zealand Dollar (GBP/NZD) Exchange Rate has continued to steadily rise today, as the Pound (GBP) was boosted by a surge in industrial orders later in the day.

At time of writing the GBP/NZD exchange rate is at $1.9390, which is up roughly 0.8% from this morning’s figures.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Strengthens Following RBNZ’s Cautious Rate Hike

The Pound New Zealand Dollar (GBP/NZD) exchange rate rose overnight, following the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision.

At time of writing the GBP/NZD exchange rate is at around $1.9326, which is up roughly 0.4% from this morning’s figures.

New Zealand Dollar (NZD) Falls after Interest Rate Decision

The New Zealand Dollar (NZD) fell against its competitors overnight as the Reserve Bank of New Zealand’s (RBNZ) decision to raise interest rates prompted aggressive selling of the currency.

The RBNZ raised interest rates for the second time in two months on Tuesday to 0.75% in response to higher oil prices, supply chain disruptions, and fuel pump prices.

Investors had been expecting a more hawkish rate hike by the central bank, but board members opted for a smaller hike so as to avoid placing undue pressure on consumer spending and business costs. This is likely to have prompted movement in NZD.

New Zealand has used significant stimulus packages in order to alleviate stress on the country’s economy during the pandemic, which in turn pushed inflation to its highest point in a decade at 4.9%.

In its forward guidance the RBNZ has made clear that further rate hikes are likely, but potentially not at the pace that NZD investors had hoped.

Pound (GBP) Dips as Fishing Right Dispute Rumbles On

Despite rising against the New Zealand Dollar, the Pound (GBP) is struggling elsewhere as confidence in the currency falters in the face of Brexit headwinds.

Talks between the UK and France regarding fishing rights have reached a critical point as news on Monday revealed that French fisherman are planning to potentially block UK vessels access to French ports. The moves comes amid claims that UK authorities are refusing to grant additional fishing licenses to French vessels.

With neither side looking to give any ground on the issue, developments in the story could cause fresh movement in GBP. French President Emmanuel Marcon has stated that France ‘will not yield’, whilst a spokesperson for UK Prime Minister Boris Johnson indicated that they would not be ‘negotiating over changing that approach’.

Negotiations between the UK and EU over the Northern Ireland Protocol may also have affected confidence in Sterling this morning, as European negotiator Maroš Šefčovič has said that he was ‘probably too ambitious’ in attempting to complete talks by the end of the year.

Šefčovič cited a lack of ‘clear political will’ from the UK as the main reason that talks would not be completed by Christmas. Progress on these talks could influence movement of the Pound in the coming days.

GBP/NZD Exchange Rate Forecast: Will Bailey Speech Hint at Early Rate Rise for BoE?

Looking forward to the week ahead, balance of trade data for New Zealand later today is forecast to show a narrowing of the trade deficit to $-2148M. Signs of the country’s further economic recovery could bolster  the New Zealand Dollar.

Thursday could see further movement in the Pound as Bank of England (BoE) Governor Andrew Bailey is set to speak on the central bank’s monetary policy. Earlier this week Bailey signalled that he may scale back forward guidance in the future, leaving decisions to be made on a month-by-month basis. Investors are sure to be watching the speech both for signs of an early interest rate rise by the BoE, and for hints of what direction Bailey may take the BoE in.

Gareth Monk

Contact Gareth Monk


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