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New Zealand Dollar Research Report

Published: Friday 03 February 2017

  • Tough times for the Pound – especially against NZD
  • New Zealand’s economic figures continue to be strong

The Pound has had a particularly tough few weeks, especially against the New Zealand Dollar. Mark Carney and the Bank of England made it clear during Thursday’s meeting that there would be very little chance of an interest rate hike in the UK over the coming months. The high inflation forecast has not changed the Bank’s mind and they appear unwilling to raise interest rates any time soon. The markets appeared to be taken by surprise, as the Pound fell almost 1.5% on the news. Mark Carney’s general comments were seen as being more dovish than expected, as he noted interest rates could move ‘either way’. The opportunity in New Zealand for high interest rates is clearly a factor, as investors look for the high yielders.

Guidance for buyers and sellers of New Zealand Dollars

In spite of indifferent New Zealand jobs data, which has seen average wages fall, the Pound looks unlikely to have any major gains versus the NZD. New Zealand’s economic figures are still strong and the potential of a Reserve Bank of New Zealand rate hike in 2017 is beginning to emerge. Technically, this Sterling disappointment looks set to send the Pound down to re-testing the 1.69 level in February. If the (relatively) upbeat sentiment around Brexit continues, then we could see the Pound test the resistance at 1.7400 on the upside. For the coming months, 1.74 looks to be the limit for NZD buyers’ aspirations. Those looking more long term should target the six-month high, just below 1.80.

FX Research and analysis by Alastair Sweetman

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