Pound to New Zealand Dollar Exchange Rate Slips Back from 2019 Best but Losses Limited
While the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has been knocked back slightly from its best levels all year, the New Zealand Dollar (NZD) still lacks the drive to push the pair down much further.
Due partially to broad New Zealand Dollar weakness, GBP/NZD saw highly impressive gains last week, opening at the level of 1.9390 and surging over four cents to close the week at the level of 1.9822.
GBP/NZD briefly surged even further during quiet Monday bank holiday trade, and touched on a fresh 2019 high of 1.9909. This was the best level for the pair since October last year.
Since then, GBP/NZD has slipped and trends closer to the week’s opening levels again. The Pound (GBP) has been able to hold its ground amid Brexit hopes.
Meanwhile, New Zealand Dollar investors anticipate tomorrow’s Reserve Bank of New Zealand (RBNZ) policy decision to see how dovish it will be in response to recent New Zealand data.
Pound (GBP) Exchange Rates Resilient on Ramping up Brexit Deal Hopes
For the past few weeks, the UK government has been holding cross-party negotiations with the Labour Party regarding a possible compromise soft Brexit deal that would be popular enough to pass through Parliament.
Signs of optimism from officials that talks were going well led to a surge in Pound (GBP) demand last week, and fresh hopes continue to support Sterling near its best levels this week so far.
Due to a poor performance from both the ruling Conservative Party and the opposition Labour Party during local elections last week, officials are feeling extra pressured to find a way to push ahead with Brexit in order to avoid further losses in support.
Since the weekend, more government officials are showing signs of optimism that a breakthrough can be made in the coming weeks, which is keeping the Pound outlook steady despite general political uncertainties.
New Zealand Dollar (NZD) Exchange Rates Unappealing as Rivals Climb
Investors have been hesitant to buy the New Zealand Dollar so far this week, as the currency’s outlook remains fairly gloomy as investors anticipate tomorrow’s Reserve Bank of New Zealand (RBNZ) policy decision.
Instead, investors have been steady on the currency in anticipation of the bank news, and have been buying the currency’s rivals instead amid the latest shifts in market risk and trade sentiment.
One rival, the Australian Dollar (AUD), has been rising since the Reserve Bank of Australia (RBA) took a surprisingly optimistic tone on Australia’s economic outlook during its May decision this morning.
Safe haven rivals like the US Dollar (USD), on the other hand, have been rising due to fresh concerns about flaring up US-China trade tensions.
Of course, the unappealing New Zealand Dollar has been unable to recover versus the Pound due to resilient Brexit hopes this week.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Outlook to be driven by Reserve Bank of New Zealand (RBNZ)
As analysts and officials don’t expect any major Brexit breakthrough this week necessarily, Pound to New Zealand Dollar (GBP/NZD) exchange rate movement is more likely to be driven by shifts in the New Zealand Dollar.
The biggest news of the week on the economic calendar is the Reserve Bank of New Zealand (RBNZ) May policy decision, which will be held during Wednesday’s Asian session – and analysts expect an interest rate cut.
Due to slews of concerning New Zealand data over the past month, RBNZ interest rate cut bets surged so quickly that investors expect the bank will cut rates to 1.50% during tomorrow’s decision.
The tone the bank takes on the cut will influence the New Zealand Dollar’s strength. If the bank indicates that it could hike rates again soon, NZD would strengthen. Signs of more cuts would lead to further NZD losses though.
Overall, the New Zealand Dollar outlook is likely to remain fairly gloomy unless the bank surprises investors and leaves rates frozen, or takes a more cautious or even hawkish stance.
Of course, the trade-correlated New Zealand Dollar will also be influenced by US-China trade developments.
Any surprising Brexit news or shifts in trade sentiment are likely to influence the Pound to New Zealand Dollar (GBP/NZD) exchange rate.