Currency - GBP / New Zealand Dollar

The Sterling - New Zealand Dollar exchange rate has at least had the decency to bounce a little bit after plummeting as most other Sterling related exchange rates have done. After trying hard to bget to NZ$ 2.30 twice in January and February, this pair plunged nearly 17 cents to the 1st March after a string of warnings about the state of the UK economy and fears over the potential for a hung parliament after the impending UK election. On the other side of the coin, the New Zealand economy is performing very well and my colleague Sam Stanley has been back in New Zealand visiting his family for the last three weeks which is curiously correlated with the advance of the Kiwi Dollar. I am sure there is no connection but it is a little spooky don’t you think.
Either way, Sterling managed to find some buyers as profits were taken and having fallen through the NZ$ 2.1850 support on the last day of February, has been back up to test that level in the last few hours. Sadly the Pound didn’t have the momentum to push back above that level so we are in no man’s land as I write. The problem is that the UK election is getting nearer, even though we are only guessing at 6th May as a likely polling day and the opinion polls are just as vague as ever. Consequently, we are still seeing weakness in the Pound through nervousness over the UK’s political and fiscal position. I remain concerned that the Pound may well drop back to the NZ$ 2.12 we saw a couple of days ago and perhaps to the NZ$ 2.10 level last seen in 1984.