GBP/NZD rates have stabilized of late, following an extremely volatile 2015 for the currency pair. The Pound reached a high of 2.45, with the NZD trading below 2 at its best point in early January.
The Pound benefited from a sustained run of positive economic data, whilst the NZD struggled due to a slowdown in its export trade, predominantly due to the economic problems facing China & Australia, two of its largest export partners. The main catalyst for this was a slowdown in their dairy trade, New Zealand’s main export, and a run of poor Construction data which was highlighted during a number of economic bulletins.
The Reserve Bank of New Zealand (RBNZ) also cut their interest rates four times during 2015 and this did little to boost market confidence in the New Zealand economy, with the NZD losing value as a result.
The NZD did find support in the latter part of the year due to an upturn in their economy, coinciding with the New Zealand rugby teams World Cup success. Gross Domestic Product (GDP) figures showed 0.9% growth in Q3 and with exports expected to improve this year, we could see the NZD find further support, with GBP/NZD rates currently trading around 2.18 on the exchange.
We also need consider the suitability that increased risk appetite from investors, due to the upturn in the global economy, will boost riskier assets such as the NZD.
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