The Pound New Zealand Dollar (GBP/NZD) exchange rate is trading lower this morning as improved market risk sentiment lends support to the ‘Kiwi’.
At the time of writing the GBP/NZD exchange rate is trading at around NZ$2.0079, down roughly 0.3% from this morning’s opening levels.
New Zealand Dollar (NZD) Buoyed as Signing of US-China Trade Deal Eases Tensions
The New Zealand Dollar (NZD) is trending higher this morning, as the appeal of the risk-sensitive currency was lifted following the signing of the ‘phase one’ trade deal between the US and China.
While the deal itself got a fairly lukewarm response from markets, given it doesn’t address any of the key issues such as forced technology transfer and state subsidies, it marks a major de-escalation of tensions between the two powers.
The deal should prevent the two sides from exchanging any more tariffs, an outcome will which will be welcomed by markets and is helping to prop up demand for risk-sensitive assets like the New Zealand Dollar this morning.
Pound (GBP) Muted amidst Brexit Concerns
Meanwhile, the Pound (GBP) is struggling to find support this morning amidst renewed uncertainty surrounding Brexit.
This comes as Brussels looks to pile the pressure on the UK ahead of the start of trade negotiations later this year.
Earlier this week France and other EU countries sought to put the squeeze on the UK government by demanding that any trade deal should be based on ‘dynamic alignment’ with the UK forced to stay in sync with EU regulations on the environment.
Michel Barnier, the EU’s chief Brexit negotiator has frequently stated that Boris Johnson’s plans for a tariff-free trade deal will largely depend on the UK accepting a ‘level-playing field’ on regulations.
GBP/NZD Forecast: Sterling to Rally as UK Retail Sales Rebound?
Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate may mount a recovery at the end of this week’s session with the publication of the UK’s latest retail sales figures.
Sterling is expected to strengthen as sales growth accelerates from -0.6% to 0.5% in December as the late timing of Black Friday saw the key sales event in last month’s figures.
In the meantime, the ‘Kiwi’ may come under some pressure in overnight trade as New Zealand’s latest PMI figures are expected to show domestic manufacturing growth came close to stagnating in December.