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New Zealand Dollars to Pounds at Highest Since April 30th

Market CommentaryNew Zealand Dollars to Pounds at Highest Since April 30th
New Zealand Dollars to Pounds at Highest Since April 30th
New Zealand Dollars to Pounds

Are you a Brit living in New Zealand and thinking of repatriating to the UK? Alternatively, are you a New Zealand business owner, making international payments to the UK for imports and exports?

If so, it could interest you to know that the New Zealand dollars to pounds interbank exchange rate has touched its highest since April 30th today, or over three weeks, at 0.5152.

As a result, when you transfer money to the UK from your New Zealand bank account, you might now get a notably higher sterling total.

This is because, by comparison, back on May 6th, the New Zealand dollar's value versus the pound was at just 0.5023. So since then, the NZD has gained by over +1.25 cents versus the GBP, or by +2.56%.

To contextualise this rise in the New Zealand dollar against the pound for you, at today's interbank exchange rate of 0.5152, NZ$250,000 would be worth £128,800.

By contrast, at the interbank exchange rate on May 6th of 0.5023, NZ$250,000 would have been worth £125,575.

So for the same New Zealand dollar total, that's an increase of +£3,225.

A first reason why the New Zealand dollars to pounds interbank exchange rate has hit this 3-week high is because it's been reported that UK Prime Minister Theresa May will announce her resignation timetable today.

In addition, a further factor why the NZD has gained in value versus the GBP is because New Zealand's exports to China hit an all-time high in April, says new data.

Let's look more thoroughly at these reasons why the New Zealand dollar has risen versus sterling. This could be useful to you, for when you transfer money to the UK in the foreseeable future.

New Zealand Dollar Rises Versus Pound, as May to Resign

A first factor why the New Zealand dollars to pounds interbank exchange rate has hit this 3-week high is because Prime Minister Theresa May will set out her timetable to resign later today, reports The Guardian newspaper.

In turn, this might increase the UK's Brexit uncertainty, including raising the risk that a "hard" Brexiteer will become leader, who'll take the UK out of the EU with "No Deal".

Earlier this week, Mrs. May unveiled her Withdrawal Agreement Bill (WAB), a new draft of Brexit that the Prime Minister hoped would win support from the opposition Labour Party.

This is because the WAB includes new concessions on workers' rights, environmental protections, and includes the option to hold a second referendum, if MPs pass Mrs. May's bill.

However, far from winning support from Labour, Mrs. May's Cabinet colleagues have rebelled against the bill.

For example, on Wednesday evening, the Leader of the House of Commons, Andrea Leadsom, resigned her post, saying that: "I cannot fulfil my duty as Leader of the House… to announce a Bill with elements that I fundamentally oppose."

Mrs. May's latest failure to pass Brexit through the House of Commons follows months of attempts. As a result, the pressure on Mrs. May to resign is immense.

Given this, The Times newspaper reports that Mrs. May will reveal her resignation date today, following a meeting with Graham Brady, the Chairman of the influential 1922 Committee of backbench MPs.

"Theresa May is expected to announce her departure from No 10 tomorrow after a cabinet mutiny over her Brexit plan.”

“May was finally cornered after cabinet ministers joined the Tory revolt over her offer to facilitate the option of a second referendum," reports Francis Elliot, the Political Editor at The Times, in a recent article.

However, if and when the Prime Minister leaves, this will add yet further uncertainty to the UK's Brexit outlook.

To start with, the Conservative Party will spend weeks choosing a new leader, while the new deadline of October 31st draws nearer. Also, former Foreign Secretary and "hard" Brexiteer Boris Johnson is the current frontrunner to replace Mrs. May.

At the time of writing, Mr. Johnson has won the public backing of 10 MPs, including the influential Chairman of the European Research Group (ERG), Jacob Rees-Mogg.

It's possible that, if Mr. Johnson becomes Prime Minister, he might pursue Brexit at all costs, and take the UK out of the EU without a deal, regardless of the economic implications for the UK.

With this in mind, both the financial markets and British businesses are concerned about the possibility that a "hard" Brexiteer might become Prime Minister.

In turn, this is encouraging international money managers to sell UK assets, given the rising risk that the UK might "crash out" of the EU in the coming months. So this has lifted the New Zealand dollar versus the pound.

NZD to GBP Rate Gains, as New Zealand Exports More to China

In addition, a further factor why the New Zealand dollars to pounds interbank exchange rate has climbed is because New Zealand's exports to China have hit an all-time high, says new data.

In turn, this could fuel New Zealand's economic growth both in Q2 2019, between April and June this year, and well into the future.

The value of New Zealand's annual exports to China exceeded NZ$15 billion in April, said Statistics New Zealand (SNZ) yesterday. In particular, New Zealand's exports of beef and lamb surged last month, up to NZ$2.7 billion.

Meanwhile, exports of both New Zealand logs and dairy products to China increased too, up to NZ$2.5 billion and NZ$2.4 billion respectively.

New Zealand's exports of meat to the world's second largest economy surged in April, because China's pigs are suffering from African Swine Fever.

So far, China has had to sacrifice 600,000 pigs to prevent the Swine Fever from spreading further, and as a result, China's pig stocks are at their lowest since the late 1980s.

In turn, to compensate for China's fall in domestic pork supplies, China is buying more New Zealand pork.

"The strong demand recently from the Chinese market for alternative protein sources, such as New Zealand beef and lamb, is partly due to African swine fever reducing pork production in China," says Stats NZ’s Overseas Trade Manager Tehseen Islam, for example.

Also, more generally, New Zealand recorded a healthy trade surplus in April. New Zealand's trade surplus reached NZ$433 million last month, below March's figure of NZ$824 million, yet comfortably above economists' forecasts for just NZ$5 million.

So this too has contributed to strengthen the value of the New Zealand dollar versus the pound.

So to sum up, the New Zealand dollar to pound interbank exchange rate has hit 0.5152 today, its highest since April 30th.

In part, this is because UK Prime Minister Theresa May could announce her resignation timetable today, and because New Zealand's exports to China have hit a record high. This information could help you to decide when to transfer money to the UK from New Zealand.

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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