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Pound Nears 2-Week High Versus Kiwi, as NZ Trade Deficit Widens

Market CommentaryPound Nears 2-Week High Versus Kiwi, as NZ Trade Deficit Widens
The pound to New Zealand dollar interbank exchange rate has hit 1.9194 today, close to its highest since February 9th, as New Zealand
The pound to New Zealand dollar interbank exchange rate has hit 1.9194 today, close to its highest since February 9th, as New Zealand’s trade deficit hit the highest for a January in 11 years last month. Image credit: Sam Savine.

by Peter Lavelle

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

This tells you when it’s a favourable time to exchange pounds to New Zealand dollars, for your money transfer!

Sterling races ahead of the kiwi! The pound to New Zealand dollar interbank exchange rate has hit 1.9194 today, close to its strongest in 2 weeks, or since February 9th.

The pound has shot up against the New Zealand dollar, because New Zealand’s trade deficit widened more than forecast in January, according to official statistics today.

The kiwi has dived, as New Zealand’s trade deficit for January jumped to -NZ$566m compared to a month before, the biggest trade deficit for a January in 11 years, says Statistics New Zealand.

This has weakened the NZ dollar, in particular because this compares to December’s record trade surplus of +NZ$596m, plus financial markets forecast for a flat trade balance.

New Zealand’s trade deficit expanded in January, especially because NZ exports hit just +NZ$4.31bn last month, as New Zealand sold lower volumes of fruit, thus weighing on the NZ dollar.

New Zealand’s trade deficit also grew larger last month, because New Zealand imported higher volumes of petroleum, turbo jets and ships, thereby dragging down the kiwi dollar too!

Pound rises, as pound more resilient to Brexit uncertainty

Moreover, the pound to New Zealand dollar interbank exchange rate has also risen, because the pound has become more resilient to Brexit uncertainty recently, say new reports.

Sterling has strengthened, because the pound has been the best-performing G10 currency in the last 6 months, even though the UK and the EU are still negotiating a Brexit deal.

In particular, the pound has climbed, because financial markets feel optimistic that the UK and the EU will agree a Brexit transition deal, by the deadline of the end of March.

Furthermore, sterling has also risen, because following the Bank of England’s (BoE’s) decision to lift UK interest rates to 0.5% in November, markets think that the BoE may hike again in May.

The pound has stood taller, especially because BoE policymaker Dave Ramsden, who previously opposed lifting UK interest rates, told The Sunday Times this weekend that he now favours rate hikes.

With all this in mind, the pound has neared this 2-week high versus the New Zealand dollar, and could rise further!

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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.

References

1. Anonymous, “NZ January trade deficit biggest since 2007”, February 28th 2018, RadioNZ.co.nz, https://www.radionz.co.nz/news/business/351369/nz-january-trade-deficit-biggest-since-2007
2. Roger Blitz, “Pound’s recovery shows resilience over Brexit outcome”, February 28th 2018, FT.com, https://www.ft.com/content/141cc442-1b0a-11e8-956a-43db76e69936

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