As can be expected, the UK’s decision to vote to Brexit from the EU has seen the Pound falling by a considerable amount against the New Zealand Dollar and all other peers. GBP/NZD initially lost around 17 cents on the news and is currently trading around the lowest level recorded since late 2013.
The New Zealand Dollar has been a more appealing option overall, although due to the strength of safe-haven demand, the ‘Kiwi’ has not been able to accomplish a universal rally.
Prior to last week’s Referendum results being announced, the Pound New Zealand Dollar exchange rate hit 2.0679. Now, however, the pairing has fallen all the way to 1.8695.
Sterling Remains Low on Long-Term Implications of Brexit
Widespread concerns about what Brexit means for the UK economy have kept the Pound under significant pressure this week, particularly in light of the serious upheaval in the Conservative and Labour parties.
Chancellor George Osborne has been speaking in an effort to reassure investors that the UK is entering the future ‘from a position of strength’, although this sentiment only sparked a brief improvement for the Pound and the currency’s previous downtrend soon continued.
New Zealand Dollar Appreciates on Trade Balance Result
The perceived value of the ‘Kiwi’ has increased in the wake of the EU Referendum vote, although this is mainly on account of high demand for currencies outside of the Euro and Pound Sterling.
Recent domestic data for New Zealand came yesterday, when the nation’s trade balance result was announced. Though this had initially been predicted to fall from 326m to 182m, the actual outcome was a far better-than-expected 358m figure.
The appeal of the ‘Kiwi’ has also been raised lately by the fact that economists remain on the fence over how easily the US will be able to weather the ‘Brexit’-induced storm.
GBP/NZD Exchange Rate Forecast
For the current week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of Bank of England (BoE) speeches on Wednesday and Friday, as well as the UK’s confidence and GDP stats, which are due out on Thursday.
For New Zealand, the only data out this week will be Thursday’s ANZ business confidence result, which will come alongside the building permits figure for May.
In the former case, UK confidence is expected to fall along with GDP, while comments from BoE officials are sure to revolve around managing the effects of ‘Brexit’.
In the latter, confidence in New Zealand’s businesses is forecast to rise by a respectable amount.