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Quick thoughts for money transfers of NZD to GBP

Written by Sam Coxhead on July 21st, 2011.      0 comments

11:50 AM (NZT) The NZD has been in hot demand over the last couple of weeks. It was started by the much higher than expected Q1NZ GDP number and was backed up this Monday by a higher inflation number. This has caused the interest rate market to aggressively bring forward the expectations of cash rate hikes from the Reserve Bank of New Zealand (RBNZ). Currently the first hike is priced for the October meeting and there is a small chance it will come even earlier in September.
The prospect of a higher NZ cash rate has caused global investors to flock into the NZD. This has seen the NZD push on to set new post float highs against the GBP. The high so far is .5322 (1.8789 GBP/NZD terms) and anywhere around current levels represents very good value buying of GBP with your NZD.
With so much already priced into the interest rate market I think that we are going to see a slowdown in the demand for the NZD. Also, overnight the Bank of England released the minutes from their last Monetary Policy meeting and these were not quite as “dovish” as expected and this could well be GBP positive over time, as long as the growth data stacks up.
In terms of support and resistance levels from the current interbank market rate of .5307. Initial resistance will come in at the .5330 level. On the downside  .5250 offers the first significant level and .5200 below that.