GBP/NZD rallies following central bank statement

GBP/NZD exchange rates have rallied nearly 2% today moving from 1.91 to a high of 1.9476 following the latest interest rate decision and accompanying statement from the Reserve Bank of New Zealand (RBNZ). This makes a significant difference on an international money transfer and to highlight this a transfer of £300k yesterday compared to this morning would have seen a net difference in NZD of 11,250 between the high/low showing how important it is to try and time your transfer.

Why has NZD fallen?

As expected the RBNZ held its key base interest rate on hold at 1.75% – this was no surprise but it was the accompanying statement which caused the New Zealand Dollar to fall sharply. The central bank surprised the market by stating: “Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down.”

They cited a fall in the global economic outlook, particularly for key trading partners like Australia, China and Europe was a significant reason as to why their forecast was rather downbeat.

The bank went on to say: “We expect ongoing low interest rates, and increased Government spending and investment, to support economic growth over 2019.

This sentiment doesn’t bode well for the New Zealand economy. This along with improved sentiment for the pound in the hope we can avoid a ‘no deal’ Brexit could and should lead to the pound rallying towards the $2 mark.

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