The NZD has made back all the ground it lost in May to Sterling as it drops under 2.10 for the first time in nearly a month. The uncertainty caused by the upcoming referendum in the UK has made investors nervous and essentially caused a major sell-off. The vote is looking a lot closer than maybe was thought only a week ago which has caused major market movements.
Continued strength for the NZD may however have a more adverse effect in the future as the Reserve Bank may be forced to cut interest rates again. Whilst there has been some good internal data for New Zealand this week, the currency continuously being strong can have a detrimental effect. In the next few weeks I believe there is a very real probability that the GBP/NZD could drop below the recent lows of 2.06.
RBNZ Interest Rate Decision
On Thursday the RBNZ Monetary Policy Committee will meet to make a decision on the interest rate. It seems likely that there will not be a rate movement this month, however the general thoughts of the committee will be discussed in a speech and a statement afterwards.
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