Pound to New Zealand Dollar Exchange Rate Tumbles as ‘Kiwi’ Capitalises on Sterling Weakness
Sterling (GBP) remains unappealing this week on pervasive political and economic concerns in the UK, making it easy for a surging New Zealand Dollar (NZD) to push the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate to multi-month lows.
While GBP/NZD had been holding above the lows seen earlier in the month, the pair slipped from 1.9395 to 1.9329 last week and has already seen even sharper losses this week so far.
GBP/NZD’s attempt at advancing on Monday was short-lived, and the pair has since plummeted over three cents. At the time of writing on Wednesday morning, GBP/NZD was trending near a 4-month-low of 1.8999.
The New Zealand Dollar outlook improved following recent Central Bank news, such as last week’s Federal Reserve policy decision and this morning’s Reserve Bank of New Zealand (RBNZ) decision.
Pound (GBP) Exchange Rates Remain Unappealing amid Persistent No-Deal Brexit Fears
Recent UK news has done little to inspire movement in the Pound. The British currency’s outlook remains dampened by Brexit uncertainty, which is still dominating both UK politics and economics.
The ongoing Conservative Party leadership contest has caused no-deal Brexit fears to revive, as frontrunner Boris Johnson has maintained that he would rather head for a no-deal Brexit than delay the process again.
With no-deal Brexit fears on the rise again, analysts perceive this uncertainty as having had a negative impact on Britain’s economic activity.
Bank of England (BoE) officials testified before the Treasury Select Committee today. BoE Governor Mark Carney warned that the risk of a no-deal Brexit was worsening, and that this uncertainty was hurting economic activity.
It followed yesterday’s retail data from the Confederation of British Industry (CBI), which came in well short of expectations.
New Zealand Dollar (NZD) Exchange Rates Surge on Reserve Bank of New Zealand (RBNZ) News
The New Zealand Dollar was one of Wednesday’s most strongly performing major currencies, as the currency surged on the back of the latest Central Bank developments.
Overnight, the Reserve Bank of New Zealand (RBNZ) held its June policy decision. It followed last week’s market-wide focus on Central Bank news.
As was widely expected, the bank signalled that further monetary policy easing was likely to be necessary.
However, due partially to recent strength in New Zealand data, the RBNZ avoided taking as dovish an outlook as many analysts expected.
This meant that expectations for a rate cut were delayed a little, with markets now pricing in August as the date for the next rate cut.
Investors expecting a more dovish stance from the RBNZ were surprised, and the New Zealand Dollar was climbing strongly today.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Outlook Depends on Trade Developments
With political developments still in focus for Pound investors, markets are looking ahead to what could be some major global trade developments at the end of the week.
New Zealand Dollar investors are still digesting recent Central Bank news, as the currency benefits from rising Federal Reserve interest rate cut bets and a less dovish than expected Reserve Bank of New Zealand (RBNZ).
The New Zealand Dollar remains sensitive to Central Bank speculation, so if tomorrow’s New Zealand business confidence data or Friday’s New Zealand consumer confidence stats surprise investors they could influence GBP/NZD movement.
Overall though, the biggest focus for the Pound to New Zealand Dollar exchange rate over the next week will be US-China trade developments.
As New Zealand is a trade heavy nation and the NZD is often correlated to trade news, an expected meeting between US and China Presidents at the weekend’s upcoming G20 Summit in Osaka could prove highly influential.
As for the Pound, any surprising political developments or Friday’s UK growth rate report could also cause some Pound to New Zealand Dollar (GBP/NZD) exchange rate movement.