The Pound to New Zealand Dollar exchange rate failed to strengthen from Monday’s brief weekly high of 1.7967 as investors began to buy back the ‘Kiwi’ following last week’s selloff. GBP NZD fell even lower on Tuesday as investors piled into risk-correlated assets, pushing the pair as low as 1.7725 and nearer last week’s record-low of 1.7633.
Pound (GBP) Sentiment Remains Damp after Selloff Fades
Sterling was sold en masse during Friday and Monday’s sessions, falling against most of its major rivals due to anxiety in the markets that Britain’s government would give up pursuing access to the European Union’s single market following the Brexit process.
While the Pound’s worst performance was seemingly behind it on Tuesday, as investors slowed their GBP selloff in favour of focusing on other currencies, sentiment towards the Pound was still mixed and the currency struggled to recover considerably despite its cheap levels.
Versus the New Zealand Dollar (NZD) especially, the Pound is near its record lows. However, GBP NZD actually continued to plummet on Tuesday as markets flocked towards risky investments.
New Zealand Dollar (NZD) Bolstered by Perceived Results of US Presidential Debate
Despite a mass NZD selloff last week on higher bets of further Reserve Bank of New Zealand (RBNZ) easing, the New Zealand Dollar has quickly recovered its strength this week and once again trends near its best levels.
Bullish demand for the risk-correlated ‘Kiwi’ was only boosted further after Monday’s American session, as markets indulged in riskier investments following the first US Presidential debate.
The debate saw the first televised clash of US Presidential candidates; the Democrat Hillary Clinton and the Republican Donald Trump.
Following the debate, market analysts perceived the ‘winner’ of the debate to be Clinton, which cheered investors as her economic policies are closer to the status quo for US markets.
This increased hopes of market stability in the coming months, and investors who felt more secure in the safety of their assets began to indulge in riskier investments in search of higher yields.
GBP/NZD Exchange Rate Forecast to Extend Record-Lows
As this week is relatively barren in terms of key New Zealand data, the New Zealand Dollar is highly likely to move alongside the market’s demand for risk-correlated assets.
This could continue so long as analysts perceive stability in global markets, but even if Clinton continues to perform strongly in polls, market demand for risk is likely to wane as the November election approaches and jitters worsen.
For the coming week however, there is plenty of opportunity for the ‘Kiwi’ to push GBP NZD down to new record lows.
Losses could be limited later in the week if UK data impresses, such as Wednesday’s September Nationwide house prices report or Thursday’s August consumer credit and mortgage approval prints. At the time of writing, GBP NZD trended in the region of 1.7725.