The Pound was struggling as soon as the new week of trading began, with GBP/NZD falling to 1.79 – within touching distance of the recent over 10-year low of 1.77.
Over the course of last week, post-Brexit uncertainty, disappointing UK data and the prospect of the BoE unleashing further stimulus kept the Pound under significant pressure.
The New Zealand Dollar, meanwhile, rallied on stabilising dairy prices and managed to continue trending higher in spite of the Reserve Bank of New Zealand’s (RBNZ) decision to cut interest rates.
These factors saw GBP/NZD sliding from 1.84 to 1.79 before the weekend.
Pound off to a Shaky Start with 2019 Cited as ‘Brexit’ Date
After taking a battering last week, the Pound looked ready to extend losses on Monday.
The ramifications of the EU Referendum remain a critical point for investors to focus on, with the latest speculation alluding to when the UK will actually end up leaving the EU.
Before she was even Prime Minister, Theresa May stated that she wouldn’t trigger Article 50 until 2017 and now recent comments from the Sunday Times have put the possible exit date as ‘late 2019’.
While some have called for an ‘immediate’ exit from the EU, others have argued that the required government mechanisms for a stable transition out of the EU are nowhere near ready yet.
New Zealand Dollar Strength Frustrates RBNZ
In a move that is likely to have disappointed the Reserve Bank of New Zealand (RBNZ), the New Zealand Dollar opened trading on a strong footing, having continued rallying in the wake of a smaller-than-expected interest rate cut.
The latest domestic data has also failed to push the ‘Kiwi’ lower, despite the July performance of services index dropping from 56.4 to 54.2 on Sunday.
One positive influence on the ‘Kiwi’ has been commodity based, with the cost of class 3 milk per hundredweight ticking up from around $16.95 to $17.
GBP/NZD Exchange Rate Forecast
This week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of the UK’s inflation rate results (due tomorrow) and Wednesday’s UK jobs news. Closing off the week for the UK will be Thursday’s retail sales stats.
In terms of news from New Zealand, tonight will bring a non-public speech from RBNZ Governor Graeme Wheeler while jobs data is scheduled for release tomorrow.
If the UK’s ecostats indicate that the economy is struggling in a post-Brexit environment, the Pound may drop to new lows against the New Zealand Dollar.