Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Benefits from BoE Leadership Speculation
Speculation over the possibility of Bank of England (BoE) Governor Mark Carney extending his term further helped to shore up the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate.
With the Treasury reported to be in discussions with the BoE investors were encouraged to take a more optimistic view, even though the odds of Carney staying on for longer do not appear particularly high.
When Carney appears before the Treasury Committee on Tuesday afternoon this could provoke additional volatility for GBP exchange rates, with the question of an extended term likely to come up.
If Carney dismisses the suggestion, though, this could weigh heavily on the GBP/NZD exchange rate as worries over Brexit and its aftermath continue to mount.
As opposition to Theresa May’s Chequers proposals builds the mood towards the Pound looks set to remain relatively bearish in the days ahead.
GBP/NZD Exchange Rate Vulnerable as UK PMIs Continue to Underwhelm
August’s raft of UK PMIs have not proved particularly encouraging, however, limiting the upside potential of the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate this week.
Both the manufacturing and construction PMIs fell short of forecast on the month, highlighting the increasing pressure on the domestic economy.
Commenting on the underwhelming construction data Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, noted:
‘The sector is hovering too close for comfort to the no change mark which makes it a contender for more disappointment next month. Though the path to Brexit is paved with good intentions, without significant progress the sector will soon be building castles in the air rather than on solid ground.’
If the corresponding services PMI also shows a slowdown in growth on the month this could weigh heavily on the GBP/NZD exchange rate.
Evidence of weakness within the crucial service sector would not bode well for the outlook of the wider economy, giving investors fresh incentive to sell out of the Pound.
Dairy Price Slump to Support GBP/NZD Exchange Rate Gains
Another weak result from the Global Dairy Trade auction could offer the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate a fresh boost, meanwhile.
As dairy prices have failed to show any growth since mid-May the New Zealand Dollar (NZD) looks vulnerable to any further decline in prices.
Unless the auction results in a sharp price rebound the mood of NZD exchange rates is likely to remain muted, particularly in the face of wider market risk aversion.
If trade tensions between the US and China continue to escalate the New Zealand Dollar may struggle to find any sort of traction against its rivals.
A fresh contraction in the ANZ commodity price index for August may give the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate a solid boost.