Could GBP improve against NZD if US interest rates rise?

Could the Pound improve against the New Zealand Dollar if US interest rates rise?

The Pound has fallen this morning against the New Zealand Dollar after a better than expected ANZ Business Confidence survey out overnight.

Although the figures were still negative they came out better than expected which caused the New Zealand Dollar to improve by 0.5% against the Pound early on this morning. The figures were still low but much better than the ten year low which came in August.

The Royal Bank of New Zealand will meet tonight to discuss their latest interest rate decision, which will be closely followed by the press conference.

However, what may cause a lot of movement for the Pound vs the New Zealand Dollar over the next twenty four hours is tonight’s US Federal Reserve interest rate decision.

The US economy has been performing very well during the course of this year and another interest rate hike would signal the eighth rate hike since December 2015 as the world’s largest economy goes from strength to strength.

With the US Federal Reserve looking to increase interest rates by another 0.25% tonight, we could see the New Zealand Dollar weaken as a result. This could encourage global investors to sell riskier commodity based currencies in favour of the safer haven US Dollar, so could this be the catalyst to send GBPNZD exchange rates back towards 2 during the course of this week?

We have seen the Pound come under pressure caused by the latest Brexit news but the Pound has remained relatively firm against the New Zealand Dollar, which highlights the weakness of the New Zealand Dollar. This is the reason I feel we could see further gains coming soon in favour of the Pound.

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