GBP/NZD Rates Remain Volatile Ahead of Tonight’s US FED Interest Rate Decision (Matthew Vassallo)

GBP/NZD rates have remained as volatile as ever over the past month, with the pair currently floating just under 1.76 on the exchange.

The Pound has been boosted over recent weeks by a run of improved economic data, and this helped move the pair up from the 1.70 range to current levels. Whilst the NZD still looks very attractive when you consider the history on the pair, NZD sellers may be wise to consider their positon ahead of tonight’s interest rate decision by the US Federal Reserve.

It is widely anticipated that the FED will hike their base rate by 0.25%, which has most likely been factored into the current rates, at least to some extent. However, any deviation from this outcome will likely have a significant impact on the global currency markets and in particular commodity based currencies such as the NZD.

The NZD is considered a riskier asset due to the heavy reliance the New Zealand economy has on the export of its raw materials. In New Zealand’s case it is their dairy export and whilst this can be extremely beneficial in times of prosperity, it is not reliable due to the outside variables required to keep this part of their economy affluent.

Therefore if the US FED raise rates then it will cause investors to sell off their riskier assets (such as the NZD) and pump money back into the USD, which will in turn boost the USD’s value and decrease the value of the NZD. We also have to consider the slowdown in global dairy sales recently and again this will have a negative effect on the NZD’s value.

Despite this the Pound is still fighting an uphill battle, due to the on-going uncertainty surrounding the UK’s Brexit and due to this high level of uncertainty means I would not be gambling on the current market.

If you have an upcoming GBP or NZD currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.

If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on [email protected]