The GBP to NZD exchange rate plummeted to lows not seen since May 2013 after Britain voted to ‘Leave’ the EU, but how long will the Pound’s bearish run last?
A stronger-than-expected raft of NZ trade data helped to shore up the New Zealand Dollar exchange rates somewhat on Monday, with the May trade balance pointing towards improved domestic economic conditions.
As a result the GBP/NZD exchange rate remained weakened, with little signs of demand for the Pound picking back up in the wake of the EU referendum.
The GBP to NZD exchange rate trended in the region of 2.05 on Thursday, and was on the rise due to foreign exchange market assumption that Britain would vote to ‘Remain’ in the EU.
However, after results of a stronger-than-expected ‘Leave’ camp were revealed, the pair began to plummet and lost around 12 cents, hitting its lowest point since May 2013.
Here are today’s live exchange rates:
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
The pound conversion rate (against pound) is quoted at 1 GBP/GBP.
FX markets see the pound vs euro exchange rate converting at 1.169.
Today finds the pound to us dollar spot exchange rate priced at 1.244.
Please note: the FX rates above, updated 19th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
British Pound (GBP) to New Zealand Dollar (NZD) Plummets after UK Votes to ‘Brexit’
Shocking markets across the world, the historic EU Referendum has resulted in Britain voting to ‘Leave’ the European Union despite markets pricing in a ‘Remain’ vote as recently as Thursday evening – while polls were still open.
The Pound plummeted across the board in response to the news, a movement that was widely forecast by economists to follow a ‘Brexit’ vote.
UK Prime Minister David Cameron also announced his resignation following the result, confirming that he expected a Conservative successor to take office by October 2016.
The onslaught of British uncertainty caused a decisive shift away from risky currencies in the foreign exchange market, with investors immediately seeking safer currencies like the US Dollar and Yen
Pound Sterling (GBP) Exchange Rates Forecast to Remain Volatile and Weak Long-Term
Uncertainty around the Pound understandably skyrocketed during Friday’s session, and a long-term process like withdrawal from the EU could mean that Sterling will remain easily pressured for years to come.
Other issues facing the Pound going forward include UK Prime Minister David Cameron’s resignation, with uncertainty in the nation likely to remain high until a successor is solidified.
An announcement from Scottish National Party (SNP) Leader Nicola Sturgeon on Friday morning also indicated that a second Scottish Referendum is highly likely, with the goal of allowing the heavily-‘Remain’ Scotland to vote on leaving the UK to remain part of the EU also likely to cause strain on the Pound.
News of the United Kingdom becoming less United (implying a less influential Pound) may also have been worsened by calls in Northern Ireland to re-unify with the rest of Ireland and thus become part of the EU again. Northern Ireland also voted majority ‘Remain’.
Data is unlikely to influence Sterling in the coming week, with markets instead fixated on which ‘Brexit’ cogs will turn next. It is widely speculated that the Bank of England (BoE) will introduce new easing measures soon.
New Zealand Dollar (NZD) Exchange Rates are Forecast to Recover Alongside Risk
While the ‘Kiwi’ has gained on Sterling, it suffered against a majority of other major currencies due to a global drop in risk-sentiment. Risk-sentiment however, will not remain off as long-term as the Pound’s lack of appeal will.
Optimistic commodity news and poor news from the US are likely to kickstart new sessions of appeal towards riskier currencies like the New Zealand Dollar.
However, it is likely that risky movements will remain low in the coming week with the ‘Brexit’ confirmation still so fresh.
This week’s upcoming New Zealand data has the potential to cause it to hold its ground better if it prints above expectations.
The May NZ trade report will be released by the time European markets open on Monday morning, followed by building permit figures on Wednesday.
Investors are also likely to remain wary of the ‘Kiwi’ after news that central banks around the world were preparing easing measures to react to the ‘Brexit’ news, including the Reserve Bank of New Zealand (RBNZ).
GBP/NZD Forecast: Pound Falls Will Continue
The question won’t be whether or not the GBP/NZD rate continues to fall, but rather by how much it will fall. In the coming week, turbulence in Britain will likely continue to dominate global headlines.
While Sterling will continue to remain pressured and weak, especially with its S&P credit rating also in question, investors are likely to rebuy the currency at its cheapest levels.
Optimistic domestic news or commodity news may help to boost the New Zealand Dollar, but risk sentiment is likely to remain low meaning its gains are unlikely to be as considerable as some of the Pound’s other rivals.
The Pound Sterling (GBP) may be able to advance against the NZ dollar (NZD) this week, given data disparities
In particular, any signs from the Bank of England (BoE) that a rate cut is not incoming could bolster Sterling, although an actual hike now seems further away than ever.
Looking much further ahead, New Zealand’s first input in the week will come from Thursday morning’s ANZ business confidence result for June, which is forecast to increase.