The pound to New Zealand dollars interbank exchange rate stands at 1.9241 today at the time of writing, and has risen by +0.5% since the start of today’s trading.
This is just -0.8% below sterling’s recent high versus the kiwi dollar, its strongest since May 27th, reached last August 28th, of 1.9398.
By contrast, back on August 10th, sterling was as weak as 1.8492 versus the New Zealand dollar. So in the month since, the pound has since strengthened by +4.05%, or by over seven cents.
This could be useful information for you, if you’re a Briton buying property in New Zealand, to emigrate to Wellington or Auckland, or a British business owner making NZ international payments.
This is because, when you exchange pounds for New Zealand dollars, you might receive a higher New Zealand dollar total in your bank account, compared to in recent weeks.
In turn, this could make it more affordable for you if you’re emigrating and buying property abroad in New Zealand, or if you’re a UK company owner buying currency for your business.
To stay up-to-date with the pound to New Zealand dollars interbank exchange rate, visit Pure FX’s Rates & Tools page. Here, select ‘GBP’ to ‘NZD’ to see this week’s interbank exchange rates.
Also, to check what’s influencing the value of sterling against the so-called kiwi dollar recently, visit Pure FX’s GBP to NZD Exchange Rate Updates page. Here, click on the latest article.
A first explanation why the pound has gained in value against the New Zealand dollar today is because the UK economy unexpectedly expanded in July, according to new statistics today.
A second factor why sterling has strengthened against the NZ dollar today is because Prime Minister Boris Johnson has said that a ‘No Deal’ Brexit “would be a failure of statecraft”.
A third reason why the British pound sterling has risen against the kiwi dollar today is because New Zealand’s manufacturing sales fell in Q2, according to official statistics yesterday.
Let’s take a closer look at these reasons why the pound to New Zealand dollars interbank exchange has risen recently. You might find this helpful for when you transfer money to New Zealand.
Pound to New Zealand Dollars Gains, as UK Economy Grows in July
As I’ve mentioned, a first reason why the pound to New Zealand dollars interbank exchange rate has gained in value today is because the UK economy unexpectedly expanded in July, according to official statistics released this morning.
This has strengthened the pound, because this has allayed fears that the UK might soon enter recession, and indicates that we remain resilient to Brexit uncertainty.
UK GDP (Gross Domestic Product) surprisingly expanded by +0.3% in July, said the ONS (Office for National Statistics) today. This exceeded investors’ forecasts for softer +0.1% growth, as well as June’s 0.0% stagnant reading.
All three sectors of the UK economy grew in July, the dominant services sector by +0.3%, manufacturing by +0.3% too, and construction by a larger +0.5%.
This data is a relief to the financial markets, because following the UK’s -0.2% contraction in Q2, between April and June, it was feared that UK GDP might shrink again in Q3, from July to September.
If this were the case, the UK would enter its first technical recession since the global financial crisis in 2008. However, these data suggest that UK GDP has picked up in the Summer.
For example, Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, said about these figures that: "The pick-up in GDP in July is a reassuring sign that the economy is on course to grow at a solid - perhaps even above-trend - rate in Q3.”
Mr. Tombs added that these figures have "substantially" weakened the case for any cuts in UK interest rates "before Britain's Brexit path is known".
Meanwhile, Paul Dales, chief UK economist at Capital Economics, said that: "GDP will get a further boost of about 0.2% in August, when car manufacturers will be at work when they are usually on holiday.”
“Overall, the economy is still fairly weak - we estimate that the underlying pace of growth is around +0.2% quarter-on-quarter - but it's not in recession,” added Mr. Dales.
Furthermore, this morning the ONS revealed that UK Manufacturing Production surprisingly grew by +0.3% in July, exceeding forecasts for a -0.1% contraction.
In addition, the UK’s goods trade deficit unexpectedly narrowed to -£9.14 billion in July, beating predictions for a wider -£9.6 billion. So these data further suggest that the UK economy is holding up the Brexit uncertainty, thus lifting the pound.
GBP to NZD Rises, as Boris Says ‘No Deal’ Brexit “Would Be A Failure”
In addition, another reason why the pound to New Zealand dollars interbank exchange rate has strengthened today is because UK Prime Minister (PM) Boris Johnson has said that a ‘No Deal’ Brexit “would be a failure of statecraft”.
Mr. Johnson’s remarks have increased the value of sterling, because they’ve lifted hopes that the PM still intends to reach a Brexit deal with the EU.
Mr. Johnson made his comments, following a meeting with Ireland’s Prime Minister Leo Varadkar in Dublin. This was the two men’s first meeting since Mr. Johnson entered Number 10 Downing Street roughly two months ago.
In particular, Mr. Johnson said at the press conference following their meeting that, if the UK exited the EU without a deal, “it would be a failure of statecraft”, reports the BBC.
The UK’s premier added that: “I want to get a deal”. This is even though Mr. Johnson has repeatedly stated that the UK will exit the EU “come what may, do or die” by October 31st with or without a deal.
Moreover, last week Mr. Johnson also said that he would “rather be dead in a ditch” than submit to MPs’ wishes to extend the UK’s Brexit deadline. So markets have met the PM’s new comments with tentative optimism.
Meanwhile, it’s looking very likely that the UK will avoid exiting the EU by October 31st. This is because MPs in Parliament are set to again vote down Prime Minister Johnson’s motion to hold a general election, before the UK’s current Brexit deadline.
Following this vote, tomorrow Parliament would be prorogued until mid-October, so Mr. Johnson will almost certainly have to request an extension to Article 50.
Money managers have welcomed MPs’ decision to vote down Mr. Johnson’s wish to hold an election before October 31st, because this would have contributed significantly to the UK’s political uncertainty.
If we’d gone to the polls, there might have been a new government, with new Brexit policies, in the space of a fortnight. So MPs’ decision helps to calm the UK’s political outlook in the immediate future, thereby boosting sterling.
Sterling Strengthens Versus Kiwi Dollar, as NZ Manufacturing Slows
Moreover, a third reason why the pound to New Zealand dollars interbank exchange rate has gained in value is because New Zealand’s manufacturing sales fell in Q2, between April and June, according to official statistics yesterday.
This has weakened the New Zealand dollar, because this may convince the Reserve Bank of New Zealand (RBNZ) to cut interest rates further in the coming months.
According to Statistics New Zealand on Sunday 8th September, New Zealand’s Manufacturing Sales fell by -2.7% over the Spring. This compares to +1.3% growth in Q1 2019, from January to March.
In particular, New Zealand’s meet and dairy manufacturing sales tumbled by -8.2%, while petroleum and coal products manufacturing fell sharply too, by -9%.
All in all, eight out of 12 of New Zealand’s manufacturing sub-sectors contracted from April to June.
According to Stats NZ Business Statistics Manager, Geraldine Duoba: "This fall comes off the back of a robust March quarter, where meat and dairy product manufacturing had the highest percentage rise since the December 2013 quarter."
This manufacturing weakness will vindicate the RBNZ’s recent surprise decision to cut interest rates by -0.5%, to an all-time low of just 1.0%.
In addition, ANZ forecasts that New Zealand’s central bank could lower borrowing costs three more times in the next few months, to just 0.25% by May 2020. This would suggest that New Zealand needs extraordinary monetary support, so has contributed to weaken the New Zealand dollar.
Get A Free Exchange Rate Quote
Get a free exchange rate quote to get a competitive exchange rate, and find out how much you could save with Pure FX.
You’ll get a competitive exchange rate for your money transfer.
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 Contact Us.