The Pound to New Zealand Dollar exchange rate softened slightly when European markets opened on Monday as analyst concerns about the future of UK-US relations left Sterling generally unappealing despite low risk-appetite.
As a result, GBP/NZD remained near the week’s opening levels of 1.72.
Pound (GBP) Slips on Concerns Over UK-US Relations
The Pound performed solidly last week in anticipation of a meeting between UK Prime Minister Theresa May and new US President Donald Trump.
While the meeting went smoothly, investors were slightly disappointed by a lack of apparent focus on trade. Demand for the Pound faded further on Monday as investors reacted to the weekend’s latest Trump controversy.
Trump inspired a spate of market uncertainty by issuing an executive order banning individuals from some largely-Muslim countries entering the US for 90 days.
At the beginning of a new week of trading, UK politicians urged Theresa May to call off Trump’s planned UK visit in protest against his order – resulting in some concerns that UK-US relations could swiftly sour.
New Zealand Dollar (NZD) Limp on Limited Risk-Appetite
The New Zealand Dollar’s advances against Sterling were tempered on Monday due to a lack of supportive factors in NZD trade.
In reaction to the weekend’s controversial executive order from US President Donald Trump, investors became warier of risk-correlated currencies like the New Zealand Dollar.
Demand for the ‘Kiwi’ was also dampened slightly by Monday’s underwhelming New Zealand trade balance results.
Economists had hoped for New Zealand’s trade deficit to finally return to surplus in December, but the figure came in at N$-41m. However, as the figure made a significant recovery from the previous figure of N$-746m, traders now hope for a surplus in January’s print.
GBP/NZD Forecast: Will the BoE Decision Boost the Pound?
While investors are jittery in reaction to the latest Trump controversies, data due throughout this week may cause movement in the Pound to New Zealand Dollar exchange rate.
Tuesday’s session will see the publication of GfK’s UK consumer confidence results from January, as well as UK consumer credit and mortgage applications from December.
Wednesday, meanwhile, will be a key session for the ‘Kiwi’. The Asian session will see the publication of New Zealand’s Q4 unemployment rate and employment figures.
Some analysts expect the unemployment rate to improve to 4.8%, but remaining at 4.9% is predicted by others.
Finally, Thursday’s Bank of England (BoE) policy meeting will be the main attraction for GBP traders this week.
The bank’s first policy decision of 2017 is not expected to lead to any changes, but any comments made by BoE Governor Mark Carney during the following press conference will be carefully looked over by analysts.
Optimistic commentary has the potential to send the Pound climbing across the board.