GBP/NZD Exchange Rate Edges Higher as Brexit Recession Fears Ease
The Pound New Zealand Dollar (GBP/NZD) exchange rate rose by 0.2% today, with the pair trading around NZ$1.914 after July’s UK growth figure beat forecasts and rose from 0% to 0.3%, lessening the chances of a Brexit recession this autumn.
David Cheetham, Chief Market Analyst at the online trading company XTB, commented:
‘Following a flat reading in June this is a positive surprise and the accompanying rise in manufacturing production is also pleasing. While the figures are [far] from stellar, after a contraction in the second quarter the chances that we see a negative GDP print in the third have now dropped significantly, meaning that a technical recession will likely be avoided.’
Today also saw July’s UK manufacturing production improve from -0.2% to 0.3%, further bolstering confidence in the economy and improving the Pound to New Zealand exchange rate.
In political news, UK markets are awaiting Royal Assent of the Hilary Benn bill, which aims to compel Prime Minister Boris Johnson to delay the October 31 Brexit deadline by three months if there is no new deal with the EU forthcoming.
However, as the anti-no-deal Brexit bill is expected to gain assent today, Pound traders are feeling increasingly relieved that a disorderly exit in October could be effectively shelved.
NZD/GBP Exchange Rate Sinks as US-China Trade Tensions Flare-Up
The risk-sensitive New Zealand Dollar (NZD) failed to gain against the Pound (GBP) after US-China trade tensions flared up after China’s exports fell after President Donald Trump continues to escalate the trade war.
Zhang Yi, an Economist at Zhong Hair Sheng Rong Capital Management, commented:
‘Exports are still weak even in the face of substantial yuan currency depreciation, indicating that sluggish external demand is the most important factor affecting exports this year.’
As China is New Zealand’s largest trading partner, this has shaken confidence in the ‘Kiwi’.
New Zealand Dollar traders will be looking ahead to August’s month-on-month electronic card retail sales figure. Any signs of improvement could provide some uplift for the struggling NZD/GBP exchange rate.
GBP/NZD Outlook: Sterling Could Continue to Rise on Easing No-Deal Brexit Fears
Sterling investors will be looking ahead to July’s UK ILO unemployment rate for July, which is expected to hold at 3.9%.
Tomorrow will also see July’s average earnings figure which is expected to ease slightly from 3.9% to 3.8%.
Meanwhile, the New Zealand Dollar could continue to weaken if Chinese inflation confirms forecasts and eases in August.
US-China trade developments will also remain in focus.
The GBP/NZD exchange rate is expected to rise higher if the anti-no-deal Brexit bill gains Royal Assent, as this will effectively shelve the UK’s disorderly exit from the European Union in October.