Pound New Zealand Dollar (GBP/NZD) Exchange Rate Jumps Ahead of RBNZ Interest Rate Decision
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate rose by around 0.5%.
The pairing is currently trading at an inter-bank rate of NZ$1.8632.
On Monday morning the ‘Kiwi’ remained under pressure ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) interest rate decision.
The bank is expected to cut interest rates for the second time in 2019.
New Zealand Unemployment Falls to 11-Year Low
Meanwhile, overnight data revealed that the New Zealand unemployment rate fell to its lowest level since 2008 financial crisis.
Unemployment dipped to 3.9% in the second quarter from 4.2% in the first three months of 2019.
This beat gloomy forecasts that predicted a rise in unemployment during the three months to June.
Describing the latest figures, Finance Minister Grant Robertson stated it was ‘a tick of approval for the Coalition Government’s economic plan and responsible management of the economy.’
However, he warned of the growing global tensions and stated:
‘Only last night we saw another escalation in the US-China trade war, while Brexit continues to add uncertainty.
‘We cannot get complacent in the face of slowing global economic growth, and these indicators will move around a bit. But, in New Zealand, we are running a surplus, have decade-low unemployment, and rising wages.’
New Zealand Dollar Slides as China Accuses US of ‘Deliberately Destroying International Order’
Meanwhile, the risk-sensitive New Zealand Dollar slumped as tensions between the United States and China escalated further.
On Tuesday, China’s official Communist Party newspaper said the US was ‘deliberately destroying international order’.
This came just a day after Washington accused Beijing of being a currency manipulator.
On Monday, the Chinese Yuan slumped below the seven-per-dollar level for the first time in over a decade.
The drop came just days after US President Donald Trump announced plans to hit China with 10% tariffs on $300 billion worth of goods in September.
Pound (GBP) Rises despite Increased No-Deal Brexit Fears
Meanwhile, Sterling rose against the New Zealand Dollar despite growing no-deal Brexit fears.
Late on Monday it was reported that Prime Minister Boris Johnson’s European envoy said it was clear the PM has no intention of renegotiating the Brexit deal.
However, Downing Street is rejecting claims it wanted talks to breakdown in order to push through a no-deal Brexit.
Speaking on Sunday, an anonymous EU negotiator said:
‘With only a few weeks to go we are back where we were three years ago.’
Added to this, a senior EU diplomat said a no-deal seems to be the UK’s ‘central scenario’ and reportedly stated:
‘It was clear UK does not have another plan. No intention to negotiate, which would require a plan.’
Pound New Zealand Dollar Outlook: Will a Dovish RBNZ Weigh on the NZD?
Looking ahead to this afternoon, the New Zealand Dollar (NZD) could slide further against the Pound (GBP) following the dairy auction.
If the Global Dairy Trade (GDT) Price Index continues to fall, the ‘Kiwi’ could slide.
Meanwhile, overnight the New Zealand Dollar is likely to remain under pressure ahead of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
If the RBNZ slashes rates once again as expected, the Pound New Zealand Dollar (GBP/NZD) exchange rate is likely to rise.