Pound to New Zealand Dollar Exchange Rate Losses Limited amid Mixed Risk-Sentiment
A combination of factors, including Brexit uncertainty and a weaker US Dollar (USD), sent the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate plummeting towards the end of last week. GBP/NZD remained under pressure this morning.
Market aversion to riskier currencies helped GBP/NZD hold its ground for most of last week. The pair opened the week at the level of 1.9430 and trended relatively closely to these levels despite Brexit uncertainties, but plummeted over two cents on Friday.
After closing last week much lower due to weakness in the New Zealand Dollar’s (NZD) rivals, near the level of 1.9128, GBP/NZD has slipped further today.
GBP/NZD briefly hit a March low of 1.9030 this morning before trending closer to 1.9108 at the time of writing, as fresh Brexit rumours kept the Pound (GBP) under pressure.
Pound (GBP) Exchange Rates Unappealing amid Fresh Brexit Rumours
Sterling spent most of last week unappealing, as the UK and EU were perceived as failing to make any breakthroughs in renegotiations of the government’s Brexit deal.
With no notable changes to the Brexit deal expected, analysts are concerned that the government’s Brexit plan could be defeated by a significant majority in Parliament once again when it sees its next meaningful vote.
As for that meaningful vote; uncertainty about that meaningful vote is part of the Pound’s weakness today.
Rumours flared up this morning that the government could change Tuesday’s Parliament vote on Brexit to be a provisional one rather than meaningful.
With under three weeks until the UK is set to formally leave the EU, this worsened market fears that the government could run down the Brexit clock and risk a no-deal Brexit.
The government has said the meaningful vote would go ahead, but Sterling remained jittery nonetheless.
New Zealand Dollar (NZD) Exchange Rates Benefit from Broad Weakness in Rivals
Last week, investors were highly hesitant to take risks due to rising concerns about geopolitical relations and the slowing global economic outlook.
However, while the New Zealand Dollar is a risky trade-correlated currency, it eventually surged towards the end of the week as investors sold its rivals the US Dollar (USD) and Australian Dollar (AUD).
Investors were anxious about the US economic outlook after the latest US Non-Farm Payrolls stats saw far less jobs were made than expected last month.
Meanwhile, the Australian Dollar (AUD) slumped as investors reacted to Australia’s latest growth results – which fell short of expectations and bolstered Reserve Bank of Australia (RBA) interest rate cut bets.
Investors bought the New Zealand Dollar as rivals tumbled, helping it to surge versus a weak Pound at the end of last week.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Outlook to Shift in Brexit Developments
While the UK government has played down the possibility of tomorrow’s vote being more provisional than meaningful, the Pound is still highly sensitive to the possibility that tomorrow’s vote could be changed in some way that could worsen Brexit uncertainty.
This week’s Brexit news could be so influential that it has the potential of being the sole cause of Pound to New Zealand Dollar exchange rate movement, and may even influence the Pound’s outlook in the mid to long-term depending on how it unfolds.
If tomorrow’s Parliament Brexit vote remains meaningful, it is likely to lead to some other decisive Brexit decisions.
In the small chance the deal passes, Sterling would surge on soft Brexit hopes. The deal being blocked again would lead to a vote on a no-deal Brexit, which would then lead to a vote on whether or not to delay Brexit.
The huge importance of these votes for the Brexit outlook means tomorrow’s UK growth stats are unlikely to be notably influential.
New Zealand’s economic calendar this week will be relatively quiet too, leaving the Pound to New Zealand Dollar (GBP/NZD) exchange rate reacting more to developments in politics and geopolitics.