GBP/NZD Exchange Rate Edges Higher on RBNZ Rate Cut Fears
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose today and is currently trading around NZ$1.884.
The New Zealand Dollar (NZD) fell against the Pound (GBP) as US-China trade tensions are showing signs of rising, following China’s reiteration that the US should lift all its tariffs.
Gao Feng, a spokesman at China’s Ministry of Commerce, said:
‘If the two sides are to reach a deal, all imposed tariffs must be removed. China’s attitude on that is clear and consistent.’
This has left many ‘Kiwi’ traders remaining jittery, as China is New Zealand’s closest trading partners and any further tensions could limit risk appetite for the New Zealand Dollar.
NZD traders are also becoming increasingly concerned that the Reserve Bank of New Zealand (RBNZ) could slash its interest rates, following Australia’s rate cut this week.
Mike Taylor, the CEO of NZ Herald, commented:
‘Certainly central banks are concerned [over the health of the NZ economy]. We’ve seen interest rates fall between one and one and a half per cent in the past six to nine month, that’s significant. We are starting to move into areas that are unprecedented in terms of [market] valuations but we’re also unprecedented in terms of where interest rates are.’
GBP/NZD Exchange Rate Improves as UK House Prices Rise
The Pound (GBP) found some benefit from today’s publication of the Halifax house prices figures for June.
These rose to their best levels since early 2017, increasing from 5.2% to 5.7%.
Russell Galley, a Managing Director at Halifax, said:
‘This extends the largely flat trend we’ve seen over recent months. More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty.’
Business leaders, according to a survey by the Institute of Directors (IoD), are becoming increasingly pessimistic about the UK’s economy.
Tej Parikh, a Chief Economist at the IoD, commented:
‘With the nature of Brexit still ambiguous and another shakeup of key government personnel in motion, many businesses have been holding back on investing in their staff, operations and technology to the detriment of UK productivity grow.’
Brexit uncertainty is continuing to weigh on Sterling today, with Tory leadership favourite Boris Johnson showing increasing signs of support for the potential scenario.
GBP/NZD Forecast: Brexit Discussions to Remain in Spotlight
New Zealand Dollar (NZD) traders will be looking ahead to Tuesday’s speech by the RBNZ’s Governor Adrian Orr.
Any indications of a future rate cut would see the NZD/GBP exchange rate fall.
Sterling investors, meanwhile, will be awaiting Tuesday’s annual BRC like-for-like retail sales for June, which are expected to improve.
Brexit will also remain in focus next week, as political tensions within Parliament are intensifying as the new Tory’s leader looms ever closer.
The Pound New Zealand Dollar (GBP/NZD) exchange rate will remain dictated by Tory leadership developments next week.