Pound to New Zealand Dollar Exchange Rate Sees Limited Losses but More May Be Ahead
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has fallen back from its best levels today, and the gradually improving global growth and trade outlooks may mean that more losses are ahead.
Since opening this week at the level of 1.9525, GBP/NZD has largely trended higher. The Pound (GBP) has been benefitting from weakness in rival currencies and GBP/NZD touched on a weekly high of 1.9805 yesterday.
However, since then the Pound has lacked the drive to push higher, while the New Zealand Dollar (NZD) remains fairly resilient. GBP/NZD is trending closer to the level of 1.9670 at the time of writing.
While the New Zealand Dollar is seeing limited demand today, hopes for improving growth and trade in China and globally are boosting the outlook for the trade-correlated currency and this could mean GBP/NZD has further to fall.
Pound (GBP) Exchange Rates Pressured by Brexit and Manufacturing Outlooks
Following gains earlier in the week, the Pound fell back from its best levels today as investors continue to speculate the year ahead for the embattled British currency.
Britain’s Parliament voted through the government’s Brexit plan before the festive season at the end of 2019, confirming that the nation will formally leave the EU at the end of January.
With Brexit now unavoidable and a year of fresh negotiations and uncertainties ahead, there is currently little reason to buy the Pound.
On top of political and Brexit jitters, the Pound is being weighed today by some concerning UK manufacturing data.
Britain’s final December manufacturing PMI printed an even deeper contraction than expected: 47.5. This made for one of the worst UK manufacturing prints since 2012.
New Zealand Dollar (NZD) Exchange Rates Weighed by Weak Chinese PMI
The New Zealand Dollar had been among the market’s best-performing major currencies towards the end of 2019.
As a result, investors have been taking profit from its highs in recent sessions and this has seen it slip, despite lasting support for the currency amid the improving global growth and trade outlooks.
The New Zealand Dollar’s weakness today is making it easier for GBP/NZD to sustain this week’s gains.
Part of this morning’s New Zealand Dollar weakness has also been due to an unexpectedly weak Chinese manufacturing PMI.
Investors brushed over the overall optimistic outlook for NZD and sold the currency from its best levels in reaction to the Chinese data, due to New Zealand’s close trade relations with China.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Gains May be Limited
The Pound to New Zealand Dollar (GBP/NZD) exchange rate was gaining today despite a lack of supportive news for the Pound and a lack of real reason for the New Zealand Dollar to slump.
As a result, the pair’s potential for gains is limited. GBP/NZD has been unable to hold its best levels, and may be in for more losses in the coming week as markets return from the festive holiday period.
The Pound may come under continued Brexit uncertainty in the coming month, as the formal Brexit day approaches. Sterling may also be influenced by UK data in the coming sessions.
Friday will see the publication of Britain’s December construction PMI, and key services and composite stats will follow on Monday.
The risk and trade-correlated New Zealand Dollar, on the other hand, could be influenced by tomorrow’s Federal Reserve meeting minutes or Chinese services data on Monday.
Any notable developments in US-China trade relations would also influence the Pound to New Zealand Dollar (GBP/NZD) exchange rate.