Are you a New Zealand citizen thinking of emigrating to the UK? Alternatively, are you a Brit living in New Zealand, and planning to repatriate to Great Britain?
If so, it may help you to know that the New Zealand dollars to pounds interbank exchange rate has hit 0.5096 today, its highest since May 1st, or in 2 weeks.
As a result, when you transfer money to the UK from New Zealand, you might now get a higher sterling total in your UK bank account, compared to in the last fortnight.
This could be of benefit to you, whether you're thinking of starting a new life in the UK, and you need funds to buy a property, or to make international payments for your business too.
By contrast, back on May 6th, the NZD was as weak as 0.5023 versus the GBP, so since then it's strengthened by close to +0.75 cents, or +1.45%.
To contextualise this rise in the value of the New Zealand dollar versus the pound for you, at today's interbank exchange rate of 0.5096, NZ$250,000 would be worth £125,575.
By comparison, at the interbank exchange rate on May 6th of 0.5023, NZ$250,000 would have been worth £127,400.
So on the same New Zealand dollar amount, that's a rise in pounds of +£1,825.
A first factor why the New Zealand dollars to pounds interbank exchange rate has hit this 2-week high is because, in the UK, wages rose less than forecast in March. In addition, a further factor is that the Conservative and Labour Parties' cross-party Brexit talks look close to collapse.
Let's look more closely at these reasons why the NZD has risen versus the GBP, for your money transfers.
UK Average Earnings Rise Less Than Forecast in March
A first partial explanation why the New Zealand dollar has strengthened versus the pound is because the UK's wages rose by less than forecast in March, said official statistics yesterday.
According to the UK's Office for National Statistics (ONS) on Tuesday 14th May, UK Average Earnings Including Bonus rose by just +3.2% in the three months to March, compared to a year ago. This is below both financial markets' forecasts for a +3.4% rise, as well as February's figure of +3.5%.
In particular, when we take UK inflation into account, Britons' wages increased by just +1.5% up to March 2019, year-on-year.
This data tells us that Britons' wages are growing less quickly than the financial markets had expected. As a result, Brits might have less money to spend in the shops than might otherwise have been the case. In turn, this could slow the UK's economic growth in coming months, compared to if wages were growing faster.
In addition, it's also worth noting that UK employment rose by less than predicted in the three months to March.
In particular, the ONS said yesterday that UK unemployment fell by -0.1% up to March, to +3.8%, a new multi-decade low. However, in this period, the UK created just 99,000 new jobs, below hopes for 141,000 new posts.
Also, the number of Brits claiming unemployment benefit was higher than forecast, according to the government's newest statistics too. The claimant count rose by 24,700 in April, said the ONS on Tuesday, ahead of both economists' predictions for 24,200, plus March's result of 22,600.
With this in mind, this suggests that the UK's job market cooled somewhat in the three months to March.
Up until now, the red-hot labour market has been a bright spot in the UK's economic performance, given the uncertainty surrounding Brexit. However, this latest data suggests that the UK's unemployment statistics may be closer to peaking.
Moreover, with UK wages growing less than hoped for, there could be less upward pressure on UK prices, in coming months.
In turn, this would provide less incentive for the Bank of England to raise interest rates, above their current 0.75%, in the foreseeable future. So this too has contributed to strengthen the New Zealand dollars to pounds rate.
Cabinet to Pressure May to End Cross-Party Brexit Talks
Moreover, another reason why the NZD to GBP interbank exchange rate has hit this 2-week high is because, in the UK, the Conservatives and Labour's cross-party Brexit talks look close to collapse.
In particular, it's thought that today the Cabinet will pressure Prime Minister Theresa May to end negotiations with the opposition party.
The financial markets reckon that the Cabinet may try to convince Mrs. May to end talks, because in recent days, high-ranking members of the government have talked down the negotiations with Labour.
For example, in The Times newspaper this weekend, Chancellor Philip Hammond was reported saying that, while talks were "amiable", they're based on a "false premise" that a deal can be struck.
Meanwhile, the BBC's Political Editor, Laura Kuenssberg, reports that one anonymous Cabinet minister has told her: "I just can't see how Labour gets us out of the hole", regarding the Tories' falling poll ratings.
In addition, another member of the Cabinet told Mrs. Kuenssberg that: "We're in a plane with the fuel running out".
What's more, further adding pressure on Mrs. May to abandon negotiations with Jeremy Corbyn's Labour, 13 ex-Cabinet ministers have written to the Prime Minister, imploring her to end talks.
In their letter, Mrs. May's 13 colleagues say that, if the Prime Minister bargains with Mr. Corbyn, she would be sacrificing the "loyal middle" of the Tory Party.
Also, it's worth noting that one member of Labour's Shadow Cabinet has told The Financial Times newspaper that talks "are headed for the rocks". The latest round of negotiations between the UK's main political parties ended on Monday, with "no substantive progress" reported.
As a result, it's looking increasingly likely that the Conservatives and Labour's Brexit talks will soon end, without a deal. If so, this would leave the UK in Brexit limbo, where it's been for the last several months, with the extended deadline to October 31st counting down.
This uncertainty may slow the UK's GDP (Gross Domestic Product) growth, so has contributed to lower the value of sterling.
Trump Says China Trade Talks Will Be "Very Successful"
Also, another partial explanation why the New Zealand dollars to pounds interbank exchange rate has reached this 2-week high is because US President Donald Trump has said that he thinks the USA's trade negotiations with China will be "very successful". If so, this might benefit New Zealand's economic growth, looking ahead.
Speaking this Monday 13th May at a White House dinner, Mr. Trump told journalists: "We’ll let you know in about three or four weeks whether of not it was successful… but I have a feeling it’s going to be very successful”, reports financial news source Reuters.
Mr. Trump's optimistic remarks follow a turbulent time in America and China's trade talks. Recently, the USA lifted its tariffs on US$200 billion on Chinese imports to 25%, from 10%.
Meanwhile, China has retaliated by putting tariffs on US$60bn of America imports, saying that China will not swallow any "bitter fruit".
If Washington and Beijing reach a deal, this might significantly lift bi-lateral trade between the world's two largest economies. What's more, this would lift a cloud from the global economic outlook.
In turn, this could accelerate New Zealand's economic growth too, since New Zealand exports and imports significant amounts with both the USA and China.
So given this, the US President’s upbeat comments have helped increase the value of the New Zealand dollar versus the pound.
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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 [email protected]