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Pound to New Zealand Dollar Exchange Rate Climbs as Central Bank Bets Keep Pressure on ‘Kiwi’

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Pound to New Zealand Dollar Exchange Rate Benefits from Lower Risk-Sentiment

Despite Brexit uncertainties and resilient demand for trade-correlated currencies, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate advanced last week. Unless some upcoming news supports the New Zealand Dollar (NZD), the pair may see further gains this week.

After opening last week at the interbank level of 1.93, GBP/NZD advanced last week due to persistent speculation and bets that the Reserve Bank of New Zealand (RBNZ) would soon cut New Zealand interest rates.

GBP/NZD ultimately ended the week over a cent higher, and at the time of writing this morning was trending near its best levels since November 2018.

The New Zealand Dollar remains one of the most unappealing major currencies on the market today, despite a lack of fresh influence in the currency’s movement.

This is largely due to RBNZ rate cut bets, as well as market anxiety ahead of Friday’s upcoming New Zealand trade balance report.

Pound (GBP) Exchange Rates Outlook Limited amid Lack of Brexit Developments

Investors continue to adjust their positions on Sterling within a relatively narrow range today, amid a lack of notable Brexit developments since earlier in the month.

The UK and EU agreed to put off the possibility of a worst-case outcome no-deal Brexit until the 31st of October at the earliest, but UK politicians are still unable to reach a solution to Brexit and deadlocks persist.

Over the last week, Parliament has been on Easter recess, but officials have continued to indicate that progress is being made regarding cross-party negotiations.

Prime Minister Theresa May is holding talks with opposition Leader Jeremy Corbyn to find some sort of compromise on Brexit. No major developments have been confirmed over the past week, leaving the Pound’s movement limited.

Sterling has avoided fresh losses though, as data continues to indicate that Britain’s consumer activity is resilient despite the Brexit uncertainties dominating business outlooks lately.

New Zealand Dollar (NZD) Exchange Rates Unappealing amid Reserve Bank of New Zealand Interest Rate Cut Bets

Over the past few weeks, investors have become more convinced that the Reserve Bank of New Zealand (RBNZ) is likely to cut New Zealand interest rates within the near future.

This has been due to numerous factors, including concerns of slowing global growth and ongoing trade tensions, but the primary cause of these bearish bets has been slews of disappointing New Zealand data.

New Zealand’s data was part of the reason the RBNZ took a dovish shift in tone in its most recent policy decision, and since then the data has only continued to disappoint investors.

Yesterday’s New Zealand Q1 inflation rate data fell well short of expectations in both major prints.

Meanwhile, strong data in Australia has left investors preferring the Australian Dollar to the New Zealand Dollar in times of trade optimism.

As a result, NZD has failed to benefit from recent strong Chinese data or other factors making investors more eager to buy currencies correlated to risk-sentiment.

Pound to New Zealand Dollar (GBP/NZD) Outlook to be driven by Central Bank Bets

Demand for the Pound to New Zealand Dollar (GBP/NZD) exchange rate is likely to remain fairly resilient over the next week, as the New Zealand Dollar is highly unappealing on Reserve Bank of New Zealand (RBNZ) interest rate cut bets.

While there is potential for downside risk in the Pound outlook, for example if there are some disappointing or concerning Brexit developments, the New Zealand Dollar remains one of the less appealing major currencies due to the RBNZ rate cut bets.

As a result, GBP/NZD is only likely to see a stronger downside shift in movement if upcoming New Zealand data impresses investors.

Friday’s Asian session will see the publication of New Zealand’s March trade balance report, which will give investors a better idea of how New Zealand is being impacted by global trade tensions.

New Zealand’s ANZ Roy Morgan consumer confidence data from April will be published as well.

Of course, with UK Parliament resuming this week, the Pound to New Zealand Dollar (GBP/NZD) exchange rate outlook could also be influenced by any surprising Brexit developments.