Pound to New Zealand Dollar Exchange Rate Slips Back from Highs as Risk-Off Cools
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has slipped back from near half-month-highs today. US-Iran tensions that led to New Zealand Dollar (NZD) losses have cooled, but the pair remains high and could see further gains next week.
After opening this week at the level of 1.9615, GBP/NZD quickly jumped higher as geopolitical jitters pushed NZD down. GBP/NZD touched on a half-month-high of 1.9825 earlier in the week.
GBP/NZD has slipped slightly since then and the New Zealand Dollar is a little more resilient at the end of the week. Still, the pair still trends relatively high in the region of 1.9744 at the time of writing.
With the Pound to New Zealand Dollar (GBP/NZD) exchange rate on track to sustain around a cent of gains this week, investors are looking forward to next week’s key UK data.
Analysts predict that the 2020 Pound outlook could rise, if data continues to show signs of resilience.
Analysts Predict Pound (GBP) Exchange Rate Outlook to Rise on Brexit Hopes and UK Data
The Pound was knocked by fresh Bank of England (BoE) interest rate cut speculation yesterday. The currency quickly found its footing again though, holding its ground today.
This is because while BoE Governor Mark Carney indicated that a rate cut would be possible if Britain’s economic outlook worsened, recent UK data has actually been fairly optimistic.
Some key aspects of Britain’s economy, such as the services sector, have been resilient amid Brexit uncertainty. On top of this, analysts expect the economic outlook will continue to recover as the year goes on.
Amid hopes that a no-deal Brexit will be avoided for now, some analysts believe that stronger UK data could prevent a BoE interest rate cut and boost the Pound in 2020.
As a result, while Brexit negotiations will remain significantly important for the Pound outlook, data and Bank of England speculation has returned to focus as well.
New Zealand Dollar (NZD) Exchange Rate Outlook Steady but Lacks Fresh Drive
The New Zealand Dollar’s movement is calming as the week draws to an end. Global risk and trade-sentiment is cooling from a brief surge in panic on US-Iran military tensions.
As neither the US or Iran appears eager to escalate tensions following a US strike last week, markets are hoping that things will continue to calm. This is making investors more willing to buy currencies correlated to risk and trade, like the New Zealand Dollar.
According to Manuel Oliveri, Currency Strategist at Credit Agricole in London:
‘Risk sentiment is back on thanks to easing geopolitical tensions and hopes of an interim trade deal between China and the US as early as next week,’
However, GBP/NZD has ultimately been able to hold its ground despite risk-sentiment returning.
This is because the New Zealand Dollar had already seen strong performance for much of the past month, and currently lacks the drive to advance much further.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Focused on Data Next Week
With the Pound outlook likely to become more focused on UK data and Bank of England (BoE) speculation and the New Zealand Dollar looking for fresh reasons to advance, Pound to New Zealand Dollar (GBP/NZD) exchange rate investors are awaiting next week’s data.
Slews of fairly influential UK data will be published throughout the week. Trade balance, production and growth stats will come in on Monday and could cause some early-week Pound movement.
This will be followed by inflation data on Wednesday, and retail sales results on Friday.
If the data beats forecasts, it could boost hopes about Britain’s economic resilience. This would soften BoE rate cut speculation and give Sterling fresh support.
The New Zealand Dollar, on the other hand, could react to Tuesday’s building permits or business confidence starts. Business PMI data, due Friday, may also be influential.
Of course, notable developments in the Brexit process or in global risk-sentiment will also influence the Pound to New Zealand Dollar (GBP/NZD) exchange rate.