Pound to New Zealand Dollar Exchange Rate Benefits from New Zealand Dollar’s Broad Weakness
Investors bought the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate yesterday due to weakness in the New Zealand Dollar (NZD), and the pair managed to hold its ground today. The Pound (GBP) struggled to advance further amid Brexit uncertainties.
Market risk-aversion and Brexit speculation caused GBP/NZD to surge last week, from the level of 1.8792 to 1.9090. GBP/NZD was unable to hold last Friday’s two-month-high of 1.9241.
On Monday, risk-aversion continued to put pressure on the ‘Kiwi’, helping GBP/NZD to advance slightly to trend near the level of 1.9171. GBP/NZD continued to trend near that level at the time of writing this morning.
Further signs that there could be a vote in the House of Commons on whether or not a second referendum of some kind should take place did little to bolster demand for the Pound today, amid concern at the lack of support.
However, the New Zealand Dollar remained weak as investors had little new reason to buy riskier trade-correlated currencies.
Pound (GBP) Exchange Rates Fail to Find Support in Brexit ‘Plan B’ or Referendum Speculations
On Monday evening, UK Prime Minister Theresa May announced her ‘Plan B’ for Brexit – one that amounted to making enough tweaks to the government’s initial plan to pass it through Parliament.
As always, the most contentious issue in the government’s Brexit plan is the Irish backstop, but the EU has not shown any willingness to change its tone on this issue.
This has left markets doubtful that any kind of major development will come from the government’s ‘Plan B’, and as a result the Pound saw generally limp trade as investors digested the news.
On Tuesday, the UK’s opposition Labour Party said the House of Commons should consider a vote on whether to hold a second referendum.
This was the first formal request on a second referendum from Labour, but the wording of Labour’s amendment indicated that the Party leadership would not be made to commit to backing the referendum.
Labour Party Leader Jeremy Corbyn has generally seemed opposed to the possibility of a second referendum, preferring to aim for a general election instead.
Amid concerns that there would not be enough support for a second referendum within the House of Commons, the Pound’s demand was limited today.
New Zealand Dollar (NZD) Exchange Rates Unappealing Ahead of New Zealand Inflation Report
On Monday, investors sold the New Zealand Dollar amid fears of slowing global growth, as China’s latest growth results revealed that the nation’s growth had slowed to its worst pace in 28 years.
The Chinese growth data actually fell within expectations, but the figure was still received with concern.
As China is the world’s second biggest economy and it heavily relies on trade links to other nations, the relatively risky trade-correlated New Zealand Dollar was sold in response to the Chinese data.
It was followed during Tuesday’s Asian session by New Zealand’s December services PSI, which slipped from 53.4 to 53.0. The previous figure was revised lower from 53.5.
With New Zealand’s latest services data falling short of expectations ahead of Wednesday’s highly anticipated New Zealand inflation report, investors had little reason to buy the risky ‘Kiwi’ today.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Investors Await New Zealand Inflation Report
Amid broad Brexit uncertainties, with UK politicians attempting to find a resolution to the seemingly irresolvable issue of how to proceed, investors have been hesitant to move much on Sterling.
This week’s Pound to New Zealand Dollar (GBP/NZD) exchange rate movement so far has been due to weakness in the New Zealand Dollar. As a result, Wednesday’s highly anticipated New Zealand inflation stats could prove influential.
New Zealand’s Q4 Consumer Price Index (CPI) inflation rate stats are forecast to have slowed to 1.8% year-on-year, and a stagnant 0.0% month-on-month.
If New Zealand’s price pressures are even weaker than expected, GBP/NZD may be in for further gains as investors sell the New Zealand Dollar.
Of course, a surprisingly strong inflation report could bolster New Zealand Dollar demand instead and push GBP/NZD lower.
With much recent GBP/NZD movement caused by political news, developments in the Brexit process and US-China trade tensions will continue to influence the Pound to New Zealand Dollar (GBP/NZD) exchange rate in the coming sessions.