Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Flat as China Lowers Import Tariffs
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate remained muted and is currently trading at around NZ$1.9659.
The New Zealand Dollar was left flat despite expectations that the US and China would soon agree upon a trade deal.
US President Donald Trump noted that an agreement would be signed ‘very shortly’.
On Saturday during a Turning Point USA event, President Trump said:
‘We just achieved a breakthrough on the trade deal and we will be signing it very shortly.’
Meanwhile, Beijing announced it was lowering tariffs on more than 850 imports, further decreasing trade tensions and providing a slight upswing of support for the New Zealand Dollar.
Gary Ng, an economist at Natixix suggests China is trying to send a message and support its economy, and added:
‘The move in lowering import tariffs reflects that the government wants to reaffirm its stance to the world on freer trade amid the trade war.
‘Domestically, lowering import tariffs are helpful in reducing business and consumer costs.’
Last Week: Sterling (GBP) Rises as MPs Pass PM’s Brexit Bill
At the end of last week Sterling edged up against the ‘Kiwi’ after MPs voted in favour of Prime Minister Boris Johnson’s Brexit Withdrawal Agreement.
The bill creates some certainty for traders, as the date for the UK’s departure from the EU is fixed as 31st January.
However, the bill increases the risk of a no-deal Brexit as Johnson made sure to ban any extension of a post-Brexit negotiating period which is due to run out at the end of 2020.
After the Prime Minister set December 2020 as a hard deadline for the UK and EU to reach a trade agreement, GBP suffered the largest weekly fall since October 2016.
Commenting on this, FX strategist at Rabobank, Pietr Matys noted:
‘Johnson is so determined to leave the EU and could do that without a trade agreement in place, so this has re-ignited concern about a hard Brexit.’
Pound New Zealand Dollar Outlook: Will a US-China Trade Deal Buoy Risk Appetite?
Looking ahead, the Pound New Zealand Dollar (GBP/NZD) exchange rate is unlikely to see any major movement over the Christmas period.
However, the risk-sensitive ‘Kiwi’ could receive further support if tensions between the US and China continue to cool.
If a date for a trade agreement to be signed is set, it could boost risk appetite and cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to fall.