GBP/NZD Exchange Rate Edges Higher despite Ongoing No-Deal Brexit Fears
The Pound New Zealand Dollar (GBP/NZD) exchange rate edged higher today, leaving the pairing trading around NZ$1.863 on the interbank market.
Sterling improved against the New Zealand Dollar this morning following the release of the UK Markit Services PMI for July, which beat forecasts and rose from 50.2 to 51.4.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, said:
‘While services activity grew in July, this marginal improvement on last month is a smokescreen. Fundamental weaknesses remain in a sector pinned down by Brexit uncertainty and increasingly stagnant global economic growth.’
Sterling has continued to struggle from last week’s breakdown in Brexit talks between the UK and the EU over the controversial Irish backstop.
Today meanwhile saw concerns that UK businesses were unprepared for a possible no-deal Brexit increase, as the Liberal Democrats warned that companies lack the necessary paperwork to continue trading within the EU.
Chucka Umunna, the Liberal Democrat’s Business Spokesman, said:
‘Pursuing a no-deal Brexit is a wholly irresponsible political choice of the new administration for which there is no mandate and which will put businesses and jobs at risk.’
NZD/GBP Exchange Rate Sinks as US-China Trade Tensions Weigh on ‘Kiwi’
The New Zealand Dollar (NZD) fell following this morning’s publication of the NZ ANZ Commodity Price figures for July, which fell to a worse-than-expected -1.4%.
However, traders have become increasingly reluctant to trade in the risk-averse ‘Kiwi’ as US-China trade tensions once again erupted last week, following US President Donald Trump’s announcement of fresh tariffs on Chinese imports.
Concerns of a possible currency war between the US and China have also risen following Beijing’s allowance of the Chinese Yuan to drop below levels previously defended.
El Kaku, a Currency Strategist at Numura, Tokyo, said:
‘It is not surprising if Beijing thinks they should weaken the yuan to negotiate with Trump when the US side is maxing out on tariffs. We expect the yuan to weaken to 7.2 this quarter.’
As China is New Zealand’s closest trading partner, this has weakened market confidence in the New Zealand Dollar, leaving it down against the Pound today.
NZD could benefit from the publication of the NZ employment figures which are due out later today, and with any signs of improvement we could see the NZD/GBP exchange rate claw back some of its losses.
GBP/NZD Outlook: NZD Could Sink Further on Weak GDP Figures
New Zealand Dollar traders are looking ahead to tomorrow’s release of the NZ Global Dairy Trade Index, which is expected to ease from 2.7% to -1.1%.
As a result, we could see the NZD fall further against the Pound.
Meanwhile, Sterling traders will be awaiting tomorrow’s publication of the UK BRC Like-For-Like Retail Sales figures for July, which are forecast to improve from -1.6% to 0.1%.
The GBP/NZD exchange rate is likely to remain volatile this week as US-China trade tensions are likely to increase, while Brexit also remains uncertain with negotiations between the UK and EU showing no signs of improvement.