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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Forecast: Will Global Trade War Impact ‘Kiwi’?

Pound New Zealand Dollar

US Trade Tensions Could Rock GBP/NZD Exchange rate

The Pound New Zealand Dollar (GBP/NZD) exchange rate is holding steady this morning, but could trade fears prompt significant movement in the coming days?

At the time of writing the GBP/NZD exchange rate is currently trending higher by 0.2%, with further gains possible if trade tensions continue to dominate market sentiment.

New Zealand Dollar (NZD) to Be Pressured by Trade War Fears?

Escalating fears that we could be barrelling towards a global trade war continue to play havoc with currency markets with riskier currencies such as the New Zealand Dollar likely to be the most impacted.

Despite Trump softening his trade stance on Wednesday in suggesting that some countries may be exempt from his plans to impose tariffs on steel imports, it has done little to calm markets.

This comes as China has threated to meet the US with an ‘appropriate and necessary response’ in the event of a trade war, while the EU has already proposed retaliatory measures.

Markets may fear that this may be the beginning of a wider trade war, which would in turn have considerable implications for commodity-correlated currencies, including the ‘Kiwi’.

Pound (GBP) Faces Further Brexit Uncertainty

Meanwhile the Pound is also likely to remain an uncertain bet for investors in the coming weeks as markets await the start of the second round of Brexit talks.

While the process was never likely to prompt a great deal of confidence in Sterling, the publication of the EU’s draft guidelines for trade talks earlier this week, has further undermined confidence in GBP.

The draft document sees the EU reject any notion that the UK will be able to ‘cheery-pick’ parts of the single market, dampening hopes of a ‘bespoke’ deal for the financial services sector.

Brexit negotiations are set to resume later this month, following a summit of EU leaders in which they will be asked to approve the draft guidelines.

GBP/NZD Forecast: UK Trade Figures to Bolster Sterling?

Looking ahead the GBP/NZD exchange rate may punch higher at the end of this week’s session as the UK publishes its latest trade figures.

Economists forecast that Friday’s data will show that the UK’s trade deficit narrowed from -£4.8bn to -£3.8bn in January, likely helping to strengthen the Pound.

Meanwhile the New Zealand Dollar may find itself tumbling next week with the release of New Zealand’s latest GDP figures, with domestic growth expected to have slowed slightly in the fourth quarter.

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