Pure FX Blog

9 March 2017

Pound Hits New 2-Month High Versus Kiwi, as UK Raises Growth Outlook

Pound Hits New 2-Month High Versus Kiwi, as UK Raises Growth Outlook

The pound to New Zealand dollar interbank exchange rate has hit 1.7642 today, its highest in 2 months, as Chancellor Philip Hammond has upgraded the UK’s growth outlook. Image credit: Annika Vogt.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to New Zealand dollar interbank exchange rate.

Sterling continues to climb versus the New Zealand dollar! The pound to New Zealand dollar interbank exchange rate has hit 1.7642 today, its highest in 2 months, or since January 6th.

The pound has risen against the kiwi, because yesterday Chancellor Philip Hammond used the Budget to upgrade the UK’s growth forecast for this year, to 2.0%, from just 1.4% before.

This has boosted sterling versus the NZ dollar, because Mr. Hammond’s new forecast suggest that the UK economy will accelerate +0.2% compared to last year, in spite of Brexit.

According to Mr. Hammond, the UK “has continued to confound the commentators with robust growth,” while the Budget “”provides a strong and stable platform for [Brexit] negotiations.”

What’s more, Mr. Hammond also forecast that UK borrowing would fall -1.2% next year, to just 2.6% of GDP, at £58.3bn, thereby also lifting sterling versus the New Zealand dollar!

Sterling strengthens versus kiwi dollar, as dairy price falls

What’s more, the pound to New Zealand dollar interbank exchange rate has also strengthened, because the price of New Zealand’s biggest export, dairy, has fallen this week.

At the latest GlobalDairyTrade auction, the price of dairy products fell -6.3% compared to a fortnight ago, to US$3,512 a tonne, thereby dragging down the New Zealand dollar.

This has lifted the pound against the kiwi dollar, because if the price of dairy products falls, New Zealand farmers will make less money from their exports, slowing New Zealand’s economy.

Elsewhere meanwhile, New Zealand manufacturing output fell -1.8% between October and December, according to official data this week, also lifting sterling versus the NZ dollar.

Given all this, the pound has hit this new 2-month high versus the New Zealand dollar today!

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