Pound New Zealand dollar (GBP/NZD) exchange rate rockets to two-month 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$2.1077, up roughly 1% from the start of today’s trading session.
New Zealand dollar (NZD) plummets following RBNZ rate decision
The New Zealand dollar (NZD) has plunged to multi-week lows against the majority of its peers this morning following the Reserve Bank of New Zealand’s latest interest rate decision.
As expected, the central bank voted to keep interest rates at a 15-year high of 5.5% for an eighth consecutive meeting yesterday.
Although interest rates were widely forecast to remain unchanged, the bank’s forward guidance struck a more dovish tone than expected, sparking a sharp NZD selloff.
An exert from the RBNZ’s policy statement read:
‘A range of business and consumer surveys, and higher frequency spending and credit data, all point to declining activity. Committee members discussed the risk that this may indicate that tight monetary policy is feeding through to domestic demand more strongly than expected.’
Following the central bank’s forward guidance, markets have increased their bets on a November interest rate cut, ultimately undermining NZD sentiment this morning.
Pound (GBP) flat ahead of BoE speech
The pound (GBP) is trapped in a narrow range against the majority of its peers this morning as a data-light UK calendar sees Sterling struggle to find a clear direction.
Amid an absence of domestic data, GBP investors will look ahead to a speech by Bank of England (BoE) Chief Economist Huw Pill later today.
As the central bank cancelled all public statements in the run up to the UK’s general election, investors will look to Pill’s speech for more clarity on a potential August interest rate cut.
Should Pill strike a dovish tone, this will likely to stoke rate cut bets and undermine the Pound.
Pound New Zealand Dollar exchange rate forecast: UK GDP to drive movement?
Looking past Pill’s speech, the main catalyst of movement for the Pound New Zealand Dollar exchange rate for the remainder of this week is likely to be the publication of the UK’s latest month on month GDP reading.
Will an expected uptick in economic growth in May underpin Sterling sentiment on Thursday?
Turning to the New Zealand dollar, a lack of market moving data for the remainder of the week could see the ‘kiwi’ continue to lick its wounds following the RBNZ’s interest rate decision.
Risk appetite could also impact the GBP/NZD exchange rate this week. As the US is expected to release its latest CPI data tomorrow, any unexpected readings could infuse significant volatility into markets.
As the more risk-sensitive currency, NZD exchange rates could be supported should an upbeat market mood prevail. However, should markets revert to cautious trade, GBP/NZD could continue to climb.