Next Target for GBP/NZD Rate Forecast at 1.82
The Pound outperformed the New Zealand Dollar over the past week and we believe an extension of this performance remains possible over coming days.
The GBP into NZD conversion continues to solidify its base above the 1.770 support level.
The currency pair moved up from a weekly open at 1.7975 to close at 1.8117 ensuring some international payments are now being quoted just below 1.79.
The rise in GBP/NZD has seen us turn more bullish on the pair having observed it breach a key trend-line marking the trend down from the May highs.
The pair is expected to continue rising from its current level, with a breakout above the current flag-like continuation pattern at 1.8115 leading to a continuation up to a target at 1.8200:.
The going higher has not been particularly easy for the pair, however, after a combination of stronger New Zealand export data and less pessimistic commentary from the central bank suggested the outlook for the economy had improved, and supported the NZD side of the pair as well.
It had been expected that the Reserve Bank of New Zealand (RBNZ) would make at least one if not two more cuts to try to give inflation a leg up and support exports, however, comments from RBNZ governor Wheeler on Tuesday indicated he was in no hurry to cut interest rates.
Part of the reason for his change in stance may have been as a result of recent data showing a very strong 12.7% rise in dairy export prices, New Zealand’s largest export.
Prices had been previously languishing in the doldrums and the RBNZ had themselves commented that one reason to try to weaken the kiwi via more easing was to help make dairy exports more competitive.
However, the recent spurt higher reduced the incentive.
The country has also seen a pickup in trade of a new breed of exports including kiwifruit, wine, apples and seafood, which all saw rises of above 10% in export volume in the year to June 2016, and some such as kiwifruit by over 40%.
The New Zealand dollar also benefits, of course, from large capital inflows due to the much higher, circa 2.0%, interest rate investors can gain by investing in New Zealand bonds, whilst yields in most other G10 countries are much lower.
Therefore, whilst the up-trend is assuredly ‘up’ in the short-term, the pound does not have as much of a fundamental advantage as compared to other pairs.
Latest Pound / New Zealand Dollar Exchange Rates
  | Live: 2.3114▼ -0.06%12 Month Best:2.3553 |
*Your Bank's Retail Rate
| 2.2328 - 2.242 |
**Independent Specialist | 2.279 - 2.2883 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
Janet Yellen to Dictate Path Forward for AUD and NZD
Foreign exchange markets have turned the upcoming speech at Jackson Hole by US Federal Reserve Chair Janet Yellen into a focal point.
Yellen will deliver the Opening Remarks at the event, organised by the Federal Reserve Bank of Kansas City, at 8AM local time. This is 13:00 BST.
While many believe the speech will be academic, others believe it could signal a September interest rate rise, in which case the US Dollar will surely shoot higher at the expense of the commodity dollars and emerging market currencies.
"Her speech will dictate the path of the AUD," say ANZ Research, "with a lack of local data and the market patiently waiting for tonight, expect narrow trading ranges during the day."
With a flattening of the US treasury curve expected on the back of her speech, ANZ see the USD strengthening further against the EUR and JPY, but a somewhat muted reaction in the AUD and NZD.
