Pound to New Zealand Dollar Exchange Rate Down from Best June Levels
Despite a lack of solid demand for the Pound (GBP) recently, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate still put in solid gains last week due to broad weakness in the trade-correlated New Zealand Dollar (NZD).
Since opening last week at the level of 1.9113, GBP/NZD has seen over two cents in gains. The pair even closed the week almost three cents higher, near a high of 1.9410. This was the best GBP/NZD level all month, since the end of May.
While GBP/NZD trends closer to the level of 1.9328 at the time of writing after sliding back, the pair remains well above last week’s levels due to the New Zealand Dollar’s weakness.
The Pound has been unable to hold its ground against most major currency rivals due to persisting no-deal Brexit fears, but the New Zealand Dollar remains highly unappealing as well.
This is largely in response to recovering strength in the US Dollar (USD), as well as market anxiety ahead of Thursday’s upcoming New Zealand growth stats.
Pound (GBP) Exchange Rates Remain Unappealing amid Conservative Leadership Contest
The market’s Pound outlook hasn’t changed much over the past few weeks. UK data continues to come in mixed, indicating that Brexit uncertainty is dampening Britain’s economic performance, and no-deal Brexit fears are still flaring up.
The Conservative Party leadership contest to succeed UK Prime Minister Theresa May officially begun last week, and the frontrunner Boris Johnson has been performing even more strongly than expected.
Johnson is a prominent Brexiteer, and has said that Britain will leave the EU at the end of October with or without a deal. This has limited the Pound’s appeal.
With the leadership contest not set to conclude until next month and Brexit uncertainties still dampening economic activity, the Pound outlook is limited.
New Zealand Dollar (NZD) Exchange Rates Recovers Slightly Following Bearish Week
Throughout last week, a combination of market aversion to trade-correlated currencies, and ultimately a stronger US Dollar (USD), left the New Zealand Dollar tumbling.
Geopolitical and trade factors, such as last week’s attacks on oil tankers at the Gulf of Oman, and ongoing US-China trade war fears, have weakened the New Zealand Dollar.
The New Zealand Dollar is a trade-correlated currency and New Zealand is a trade-heavy nation, so fears that global trade will keep worsening have had a negative impact on New Zealand economic uncertainties.
Towards the end of the week, the US Dollar (USD) recovered as well. Speculation that the Federal Reserve may not be as dovish as speculated bolstered USD demand and as a result NZD tumbled.
The New Zealand Dollar has seen a modest recovery this morning, as investors buy the currency back following its tumble at the end of last week. The currency’s gains remain limited however.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Awaits Fed News and New Zealand Growth
With the UK Brexit and political outlooks still likely to be dominated by uncertainty for much of the next month, the New Zealand Dollar’s (NZD) more volatile movements are likely to drive GBP/NZD movement for the coming sessions.
The trade-correlated New Zealand Dollar could see a surge in demand in the middle of the week, if the Federal Reserve’s June policy decision is particularly dovish, or if New Zealand’s Q1 Gross Domestic Product (GDP) report impresses.
The Federal Reserve is expected to take a more dovish stance on the US economic outlook and signal that US interest rates will be cut, but some analysts believe the bank will not be as dovish as investors expect.
New Zealand’s Q1 growth rate report is more likely to be directly influential to GBP/NZD when it is published during Thursday’s Asian session. NZ growth is predicted to have remained at 0.6% quarter-on-quarter but improved to 2.4% year-on-year.
If New Zealand growth was weaker than expected, the Pound to New Zealand Dollar (GBP/NZD) exchange rate could be in for another week of gains.