Pound to New Zealand Dollar Exchange Rate Tumbles on Brexit and Reserve Bank of New Zealand
While market trade-sentiment has been mixed this week, the New Zealand Dollar (NZD) has been fairly bullish and has helped to push the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate lower and lower throughout the week.
Since opening this week at the level of 1.9924, GBP/NZD has failed to return to last Friday’s 2019 best level of 1.9981 and has tumbled instead.
Seeing notable losses for most of this week’s sessions, GBP/NZD trended near a weekly low of 1.9558 at the time of writing on Thursday.
The Pound to New Zealand Dollar exchange rate continued to fall, and its latest losses were due to a combination of fresh UK political jitters and Reserve Bank of New Zealand (RBNZ) comments bolstering the New Zealand Dollar.
Pound (GBP) Exchange Rates Tumbling as Political and Brexit Chaos Returns to Headlines
The Pound (GBP) plummeted yesterday, as the brief rise in soft Brexit hopes seen earlier in the week were unravelled amid a fresh surge in UK political uncertainties. Sterling continued to weaken today as those concerns persisted.
MPs returned to parliament yesterday, after the Supreme Court ruled prorogation unlawful, and tensions in the House of Commons were high all day.
Efforts are reportedly beginning to force Prime Minister Boris Johnson to ask for a Brexit delay sooner rather than later in order to prevent a no-deal Brexit, but this has led to a rise in fears that the uncertainty which has gripped Britain all year will persist for months to come.
Investors became more aware of the seemingly inescapable deadlock in domestic politics due to clashes in parliament. According to Jane Foley from Rabobank:
‘there was some misplaced optimism that Johnson would be removed and no-deal would be further away. But what we see today is that the status quo in terms of Brexit has not altered at all,
But we still have Johnson in place, the opposition still doesn’t want a general election and we are still cornered with respect to Brexit, it’s taken a day for that to sink in.’
New Zealand Dollar (NZD) Exchange Rates Climb on Reserve Bank of New Zealand (RBNZ) Relief
Rumours that the Reserve Bank of New Zealand (RBNZ) was discussing experimental policy, combined with high RBNZ easing bets, had been a major cause of New Zealand Dollar losses in recent weeks.
As a result, the latest comments from the bank’s Governor were relieving to investors and the New Zealand Dollar outlook has risen.
Demand for the ‘Kiwi’ surged today, in reaction to news that RBNZ Governor Adrian Orr said the bank was unlikely to use unconventional policy measures.
He said:
‘We are currently thinking hard about these questions, because it makes sense to do so as a precaution – it’s best to put the roof on when the sun is shining,
Our current view is that we are unlikely to need ‘unconventional’ monetary policy tools. But we would be remiss not to be prepared.’
It followed the RBNZ’s less dovish than expected monetary policy decision yesterday, which also supported the New Zealand Dollar.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate May Fall Further on Trade Sentiment
The New Zealand Dollar has seen strong demand this week, despite mixed market demand for riskier trade-correlated currencies.
As a result, with trade-sentiment improving in recent sessions, the New Zealand Dollar may be in for further gains as the outlook improves.
US-China trade tensions have been perceived as improving, due to optimistic comments over talks from US President Donald Trump.
This, as well as news of Saudi Arabia’s recovering oil supply, are helping trade-sentiment to recover.
Combined with the Reserve Bank of New Zealand’s (RBNZ) less dovish rhetoric, the New Zealand Dollar outlook is improving and could keep gaining against Sterling in the coming days.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate outlook is even more likely to worsen if tomorrow’s UK consumer confidence data disappoints, or if UK political and Brexit jitters intensify.
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