Sterling looks weak against high yielding currencies
GBP looks weak against high yielding currencies like NZD. BOE interest rate now stands at 0.25% and there are high expectations that the rate could go down to zero!
BOE has also restarted its QE program as well.
Meanwhile, interest rate in New Zealand are at 2.25%. A 25 bps rate cut next week looks like a done deal. Still, even at 2%, the Kiwi offers a substantially high yield over GBP. Plus, things in New Zealand are far away from zero lower bound and QE.
Hence, upticks in the GBP/NZD cross are likely to be met with fresh offers. Also note, the yield differential suggests NZD is likely to rally more than GBP during bouts of US dollar weakness.
Overall, the GBP/NZD cross looks poised to re-test July lows around 1.77. Prices could go even lower in the long-term
BOE has also restarted its QE program as well.
Meanwhile, interest rate in New Zealand are at 2.25%. A 25 bps rate cut next week looks like a done deal. Still, even at 2%, the Kiwi offers a substantially high yield over GBP. Plus, things in New Zealand are far away from zero lower bound and QE.
Hence, upticks in the GBP/NZD cross are likely to be met with fresh offers. Also note, the yield differential suggests NZD is likely to rally more than GBP during bouts of US dollar weakness.
Overall, the GBP/NZD cross looks poised to re-test July lows around 1.77. Prices could go even lower in the long-term
