NZD higher exchange rate

Tuesday, 24 February 2009

There was no data of any real significance on release from New Zealand last week so the fact that we had some better than expected data from the UK meant we saw the GBP/NZD cross move from a low on Tuesday of 2.7450 to a high this morning of 2.85. The data mentioned was a mix of house prices and inflation; with house price figures from Rightmove and HBOS showing a slight improvement for the month and UK inflation also showed that it is cooling much slower than expected with a YOY figure 3.0% down from only 3.1%. We also had a surprise 0.7% rise in retail sales released on Friday which again helped to strengthen the Pound over some of the more volatile currencies such as the Kiwi.

This week looks like more of the same with very little out in New Zealand so we will most likely see the Sterling – Kiwi cross driven by goings on in the UK. The key data release this week is the final UK GDP Q4 figure which is likely to be revised downwards YOY from -1.8% to -1.9%. We are still undecided about how damaging this will be for the Pound and could also see a worse than expected reading so those looking to purchase NZD over the next month or so may want to take advantage of the higher than expected exchange rate that we are currently seeing.

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