Pound to New Zealand Dollar Exchange Rate at Weekly Low amid Lack of GBP Support
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate plummeted today, as despite broad expectations of an interest rate cut from the Reserve Bank of New Zealand (RBNZ), the bank surprised investors by leaving policy frozen.
After opening this week at the level of 2.0185, weakness in the New Zealand Dollar (NZD) made it easier for GBP/NZD to climb.
GBP/NZD briefly touched on a three-week-high of 2.0319 overnight, but plummeted over two cents after the RBNZ decision. At the time of writing on Wednesday, GBP/NZD is trending near a weekly low of 2.0046.
It follows last week’s relatively modest rise in GBP/NZD. The pair rose about half a cent from 2.0124 last week due to RBNZ interest rate cut bets weighing on the ‘Kiwi’.
Pound (GBP) Exchange Rates Lack Drive amid Lasting Election Uncertainties
While some fairly notable UK ecostats have been published in recent sessions, the Pound (GBP) has only seen limited reaction to the data.
Monday’s growth stats and yesterday’s job market stats came in below expectations in multiple major prints. In particular, yesterday’s wage growth and job vacancy stats caused market concern that Britain’s job market was slowing.
While these stats weighed on Sterling, the British currency’s movement has been more correlated to developments in UK politics ahead of next month’s general election.
News that the populist Brexit Party will not stand candidates in seats won by the Conservative Party in the last election has kept the Pound fairly supported.
This is due to hopes that it will make it easier for the ruling Conservatives to win a majority and pass its relatively soft Brexit plans.
New Zealand Dollar (NZD) Exchange Rates Surge on Reserve Bank of New Zealand (RBNZ) Surprise
After days of broad market expectation that the Reserve Bank of New Zealand (RBNZ) would cut New Zealand interest rates in its November policy decision, the bank ultimately surprised investors.
The November policy decision took place during today’s Asian session and the bank shocked by leaving interest rates frozen at 1.0%, rather than cutting to 0.75% as was widely expected.
This led to a surge in New Zealand Dollar demand. The currency surged against rivals as RBNZ rate cut bets were set back. According to Imre Speizer, Head of New Zealand Strategy at Westpac Bank:
‘It’s flying. It was a massive surprise,
There’s a lot of position exiting going on.’
Explaining its surprising decision, the RBNZ said:
‘Economic developments since the August Statement do not warrant a change to the already stimulatory monetary setting at this time,
We will add further monetary stimulus if needed.’
Still, the New Zealand Dollar’s advances were ultimately limited by fresh market trade jitters, as US President Donald Trump continued to take a hard stance on the US-China trade war.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Awaits New Zealand Data
The Reserve Bank of New Zealand (RBNZ) indicated today that it didn’t see the need for looser monetary policy just yet, but markets still expect another rate cut in the coming months.
RBNZ interest rate cut bets would rise if upcoming New Zealand data continued to disappoint investors. As a result, investors will be watching for Friday’s New Zealand business PMI from October.
Britain’s October retail sales results will be published tomorrow, but these are likely to be brushed over in favour of focus on Britain’s election outlook unless the data is highly surprising.
As for election developments, further signs that a Conservative Party majority is likely at next month’s election would boost Pound demand.
Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate outlook will continue to be driven by UK politics and US-China trade relations next week, amid a lack of major data due for publication.