The GBP/NZD exchange rate hit its best level since December 2016 as a tumbling US Dollar boosted the appeal of the Pound.
The New Zealand Dollar’s losses have come in spite of a positive assessment of the nation’s finances issued by Moody’s Investor Service.
Last week the Pound gradually edged up from 1.76 to close trading against the US Dollar at 1.77 on Friday.
GBP Advances on USD Crash as Brexit Looms
The Pound advanced by 0.7% against the New Zealand Dollar on Monday as GBP exchange rates broadly gained in the face of a weakening US Dollar.
The US Dollar’s crash followed a withdrawal of a key Trump policy. This shattered confidence in Trump’s abilities to boost the US economy with his planned stimulus measures, softening USD and leading traders to buy into the Pound due to its comparatively safe status.
This positive Pound movement comes on the eve of the official start of Brexit negotiations, however, so the gains may be short lived.
New Zealand Holds AAA Credit Rating
Apart from the losses against a dominant Sterling, the New Zealand Dollar has otherwise been holding firm today due to a recent Moody’s report.
The credit ratings agency has left its NZ ranking at AAA. Praising national leadership for the economic stability, Moody’s officials said;
‘We expect New Zealand’s economy to be among the fastest growing AAA-rated economies in coming years. As incomes in China and the rest of Asia continue to rise at a solid pace, demand for New Zealand’s products and services, including dairy, tourism and education, will also continue to support growth’.
GBP/NZD Exchange Rate Forecast
This week, Pound/New Zealand Dollar exchange rate movement may occur as a result of Tuesday’s Scottish parliament vote on independence, as well as Wednesday’s Article 50 trigger by Theresa May.
In the former case, Scottish MPs are expected to approve plans for a second independence referendum, which could weaken GBP. Despite the implied instability, it remains to be seen whether a referendum will be held before or after the UK leaves the EU.
The main event will be Wednesday’s Article 50 activation, which will officially start the Brexit process. With negotiations potentially beginning this week, the Pound could drop on the news. The trigger has been a long-time coming, however, so losses may be limited due to economists ‘pricing in’ the event.
Later in the week, the Pound is expected to be moved by Thursday’s GfK confidence score and Friday’s Q4 GDP growth stats.
A potentially GBP-damaging confidence drop has been forecast, while annual GDP is expected to slow. This could ensure the GBP NZD exchange rate closes lower on Friday.
New Zealand is set to have a quiet time this week, with the main domestic data releases due on Thursday and Friday.
Building permits figures and the ANZ business confidence score are due; both previously posted positively.