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Pound Reaches 6-Week High Versus NZ Dollar, as UK Q1 GDP Revised Up

Market CommentaryPound Reaches 6-Week High Versus NZ Dollar, as UK Q1 GDP Revised Up
Pound Reaches 6-Week High Versus NZ Dollar, as UK Q1 GDP Revised Up
Image credit: Darren Foster.

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

This tells you when it's an excellent time to exchange pounds to New Zealand dollars, for your money transfer!

Sterling jumps versus the kiwi! The pound to New Zealand dollar interbank exchange rate has hit 1.9518 today, its highest since May 17th, or 6 weeks.

The pound has strengthened against the NZ dollar, because the UK's economic growth for early 2018 has been revised up, said official statistics last week.

Sterling has risen, because UK GDP for January to March has been surprisingly lifted by +0.1% to 0.2%, according to the UK's Office for National Statistics on Friday.

UK GDP has been revised up, as the "Beast from The East" cold front knocked off just -0.8% from UK construction output, rather than the -2.7% previously thought, thus lifting the pound.

This has lifted sterling, first because this tells us that the UK economy was stronger in early 2018 than previously estimated, which bodes well for UK GDP growth in the coming months.

This has also boosted the pound, because with UK Q1 GDP higher, this lifts the chances that the Bank of England will hike UK interest rates in August, by +0.25% up to 0.75%!

Kiwi Weakens, as RBNZ May Cut Interest Rates

Moreover, the pound has also reached this 6-week high against the kiwi dollar, because the Reserve Bank of New Zealand (RBNZ) may cut NZ interest rates, looking ahead.

The New Zealand dollar has lost out, because last Wednesday June 27th the RBNZ again held NZ interest rates at 1.75%, yet signalled that its next move could be a hike or a cut.

In particular, new RBNZ governor Adrian Orr said that "we are well positioned to manage change in either direction – up or down – as necessary", thus weakening the kiwi dollar.

It's thought that New Zealand's central bank may cut interest rates, to compensate for lower kiwi business confidence, as well as global trade tensions, thereby weighing on the NZ dollar.

"If conditions deteriorated significantly, a cut could eventuate quite rapidly," according to ANZ Bank New Zealand senior economist Liz Kendall, so dragging down the New Zealand dollar.

As a result, the pound to New Zealand dollar interbank exchange rate has reached this 6-week high, and may rise higher!

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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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