Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as RBNZ Reveal Risks Remain High
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate rose and the pairing is currently trading at an inter-bank rate of NZ$1.9396.
In its half-yearly financial stability review, the Reserve Bank of New Zealand (RBNZ) said that household risks have not changed much over the past six months.
The Financial Stability Report highlighted that ongoing problems overseas can harm the financial system, with the largest risk being high asset prices and debt levels in China.
In the report, the bank states:
‘There remain a number of risks that could materially weaken the global economy or disrupt the global financial system, and would spill over to New Zealand. Global economic growth has slowed in the past six months, but the most severe international risks remain largely unchanged.’
Sterling (GBP) Rises despite Risk of No-Deal Brexit
The Pound rose against the risk-sensitive ‘Kiwi’ despite markets fretting over the new Prime Minster having less time to negotiate another Brexit deal.
This likely fuelled fears that the risk of a no-deal Brexit is increasing.
Meanwhile, Conservative leadership contender James Cleverly stated that not delivering Brexit at all would be ‘significantly more damaging’ than a no-deal.
Speaking to BBC Radio 4’s Today programme, he stated that his party’s ‘political reputation would be damaged’ if Brexit was not delivered.
New Zealand Dollar (NZD) Falls as US-China Trade Tensions Rise
On Wednesday, Chinese media suggested that China would restrict rare earth sales to the US, something they were very dependent upon.
It has been suggested that China could use its dominant position as an exporter of rare earths to hit back at the United States.
This increased trade tensions, and pressured markets weighing on the risk-sensitive ‘Kiwi’.
The People’s Daily stated:
‘Will rare earths become a counter weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery.
‘Undoubtedly, the US side wants to use the products made by China’s exported rare earths to counter and suppress China’s development. The Chinese people will never accept this!
‘We advise the US side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!’
Pound New Zealand Dollar Outlook: Will Rising NZ Building Permits Buoy NZD?
Looking ahead to this evening, the New Zealand Dollar (NZD) could rise against the Pound (GBP) following the release of the NZ building permits.
If Statistics New Zealand reveal that the number of building permits for new construction projects rose higher than forecast, the ‘Kiwi’ could rise.
However, on Friday the Pound could rise following the release of the UK GfK consumer confidence.
If May’s consumer confidence rises higher than expected, it could cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to rise.