Apparent unrest among Government ministers about the future path of ‘Brexit’ saw the Pound revert to type and register losses against currencies like NZD at the start of a new week of trading.
Demand for the New Zealand Dollar was also heighted in response to the news that Prime Minister John Key will be attempting to strengthen New Zealand’s international connections in the near-term.
Last week’s GBP NZD performance was generally disappointing, despite Reserve Bank of New Zealand rate cut concerns weighing on the ‘Kiwi’. Over the course of the week the Pound shed 3 cents against the New Zealand Dollar
Speculation about UK Chancellor Keeps GBP Weak
The latest source of negative sentiment among GBP investors has been Chancellor Philip Hammond, who remains at the centre of rumours that the pressures of implementing ‘Brexit’ could see him resign.
Hammond is also said to be encountering difficulties when discussing UK-EU immigration with Government colleagues.
Adding to the discontent surrounding ‘Brexit’ proceedings was the news that now-Foreign Secretary Boris Johnson had written a pro-Remain article during the EU Referendum campaigns, making his involvement in the ‘Leave’ group questionable.
New Zealand Dollar Gains Inspired by Approaching Key-Modi Meeting
The New Zealand Dollar found itself supported during Monday’s trading session despite disappointing domestic data.
New Zealand’s Performance of Services Index dipped from 57.9 to 54.1 in September. While this dip isn’t great news, the measure remains well above the 50 mark separating growth from contraction.
Other local news, that PM John Key is due to meet with Indian Prime Minister Narendra Modi next week in a bid to strengthen economic ties between the two countries, had more of a positive impact on NZD trading.
GBP/NZD Exchange Rate Forecast
This week, Pound Sterling/New Zealand Dollar exchange rate movement may occur as a result of UK inflation, jobless claims, unemployment and retail sales results.
New Zealand news with the potential to spark GBP NZD volatility includes the nation’s inflation figures and dairy price data.
Tuesday’s UK inflation rate results for September are expected to show a rise on the year, while Wednesday’s jobless claims figure for the same month has a decline forecast.
Less positively, Wednesday’s August unemployment rate has a rise from 4.9% to 5% forecast, although any negativity could be displaced on Thursday by positively-predicted monthly UK retail sales. While the Pound has been decoupled from UK data to a certain extent in recent weeks, upbeat stats for the nation could help GBP recover some of its recent losses – as long as there are no further Brexit shocks on the horizon.
Additionally, inflation in New Zealand is expected to fall, while the previous dairy trade result saw a drop of -3%. Negative numbers for NZ could add to the argument in favour of the Reserve Bank of New Zealand (RBNZ) cutting interest rates and pressure the ‘Kiwi’ lower.