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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as NZ Business PMI Contracts

GBP/NZD Exchange Rate Edges Higher on NZ Economic Jitters

The Pound New Zealand Dollar (GBP/NZD) exchange rate rose by 0.6% to around NZ$1.939 this morning after last night saw the release of August’s NZ business PMI which remained mired in contraction territory at 48.4.

As a result, New Zealand Dollar traders have become increasingly jittery over the health of the NZ economy.

Doug Steel, Senior Economist at BNZ, commented:

‘[D]isconcertingly, the PMI adds to a building case over recent times that there has been a palpable softening in demand – at least for manufactured goods.’

The risk-sensitive NZ markets are remaining cautious around US-China trade relations today after US Treasury Secretary Steven Mnuchin’s commented that he was ‘cautiously optimistic’ over a trade deal.

After yesterday’s ceasefire, in which US President Donald Trump agreed to suspend tariffs on Chinese goods, traders are slowly becoming more optimism in the ‘Kiwi’. However, this has failed to buoy the NZD/GBP exchange rate today, as doubts still weigh on NZ market confidence.

Jacob Kierkegaard, a Global Trade Expert at the Peterson Institute for International Economics, commented:

‘Trump faces a slowing economy [and requires] people to stop talking about a recession… I think it suits both governments to have a bit of a breather right now.’

GBP/NZD Exchange Rate Rises as No-Deal Brexit Fears Ebb as Commons Speaker Challenges Boris Johnson

The Pound edged higher against the New Zealand Dollar today after Commons Speaker John Bercow has vowed to stop Prime Minister Boris Johnson breaking the law on Brexit and pushing through a no-deal on October 31.

Mr Bercow said:

‘If I have been remotely ambiguous so far, let me make myself crystal clear. The only form of Brexit that we have, whenever that might be, will be a Brexit that the House of Commons has explicitly endorsed.’

As a result, UK markets have been buoyed on the reduced prospect of a no-deal Brexit next month.

Lee Hardman, an Analyst at MUFG, commented:

‘The relief rally for the pound mainly reflects market participants breathing a sigh of relief that imminent no-deal Brexit and UK recession risks have eased. However, we believe there is only limited scope for the pound to extend its advance at the current juncture with UK political and Brexit uncertainty set to remain elevated in the coming months.’

Due to no notable UK economic data releases until next week, the Pound will remain driven by Brexit developments today.

GBP/NZD Outlook: Brexit Developments to Remain in Focus

New Zealand Dollar traders will be looking ahead to Tuesday’s release of New Zealand’s Global Dairy Trade Index. Any signs of improvement in NZ’s largest commodity could bolster the NZD/GBP exchange rate.

Meanwhile, Sterling investors will be looking ahead to Wednesday’s publication of August’s UK inflation figure. If these improve, we could see the Pound rise against many of its competitors.

The GBP/NZD exchange rate will likely be driven by political developments next week, with any further challenges to a no-deal Brexit proving Pound-positive.