Pound New Zealand Dollar (GBP/NZD) exchange rate jumps to two-week high
The Pound New Zealand Dollar (GBP/NZD) exchange rate surged overnight following the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision.
At the time of writing, GBP/NZD is trading at NZ$2.0724, up roughly 0.9% from the start of today’s trading session.
New Zealand Dollar (NZD) plummets on RBNZ rate decision
The New Zealand Dollar (NZD) has plunged to multi-week lows against some of its peers this morning following the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision.
As predicted, the central bank voted to keep rates at a 15-year high for a fifth consecutive meeting yesterday, at 5.5%.
Although interest rates were forecast to remain unchanged, the bank’s forward guidance struck a more dovish tone than expected, ultimately sparking a NZD selloff.
An exert from the statement read:
‘The Committee remains confident that the current level of the OCR (official cash rate) is restricting demand. However, a sustained decline in capacity pressures in the New Zealand economy is required to ensure that headline inflation returns to the 1 to 3 percent target. The OCR needs to remain at a restrictive level for a sustained period of time to ensure this occurs.’
While the RBNZ hinted that it won’t begin cutting interest rates until 2025, its signal that rates have now peaked was enough to pull the New Zealand Dollar lower.
Pound (GBP) Mixed ahead of BoE speech
The Pound (GBP) is fluctuating against its peers this morning, rising against some of its more risk-sensitive counterparts but faltering elsewhere, as GBP investors await a speech from Bank of England (BoE) policymaker Catherine Mann.
Mann is one of the most hawkish members of the Monetary Policy Committee, and was one of the two monetary policy members to vote for another rate hike during last month’s interest rate decision.
Should she maintain a hawkish outlook on monetary policy, this could lend Sterling support this afternoon.
Pound New Zealand Dollar exchange rate forecast: UK manufacturing PMI to undermine Sterling?
Looking past Mann’s speech, the likely catalysts of movement for the Pound New Zealand Dollar exchange rate on Friday will be the release of the latest manufacturing PMI for the UK.
February’s finalised figures are expected to confirm the UK manufacturing sector remained in contraction, only rising from 47 to 47.1. Potentially hobbling the Pound at the end of the week.
Turning to the New Zealand Dollar, NZD investors will turn their attention to Thursday’s ANZ business confidence index, for February.
January’s reading of 36.6 came in at the highest level since July 2014. With forecasts expecting a further rise in February, to 38, this may in turn bolster NZD exchange rates.