A lack of demand for risk-correlated currencies like the New Zealand Dollar has made it easier for the GBP/NZD exchange rate to sustain most of last week’s gains.
Sterling has also begun this week trading well amid hopes for progress in Brexit negotiations.
GBP/NZD fluctuated by almost five cents last week before ultimately closing out the week up three cents from opening levels.
Pound Sterling Exchange Rates Supported Brexit Negotiation News
After being boosted by stronger-than-expected UK retail sales data last week and benefitting from weakness in rivals like the New Zealand Dollar, the Pound firmed on Monday morning on the latest Brexit hopes.
Over the weekend, UK Chancellor Philip Hammond indicated on the BBC’s Andrew Marr Show that the UK government was preparing to increase its offer on the Brexit ‘divorce bill’.
If the offer is upped and accepted, the UK may finally be able to progress trade talks with the EU – and the prospect of this sent the Pound broadly higher.
Sterling is also firming ahead of Wednesday’s UK Autumn Budget.
New Zealand Dollar (NZD) Exchange Rates Weak in Risk-Off Market
A lack of demand for higher-risk currencies, political uncertainty in the US and declining prices of key commodities have left New Zealand Dollar (NZD) exchange rates struggling.
Investors are currently anxious that US President Donald Trump’s ambitious tax reform proposals will be scaled back to simple tax cuts and may not succeed in passing through Congress.
On top of this, the Trump-Russia story continues to hit headlines.
Monday’s New Zealand data did little to support the New Zealand Dollar.
October’s Performance of Services Index slipped from 55.9 to 55.6 while October’s food inflation figure dropped from 3% to 2.7% year-on-year.
However, while New Zealand’s PSI measure slipped, Business New Zealand (BNZ) Senior Economist Doug Steel did comment that; ‘these are robust results given the prevailing uncertainty surrounding the election, coalition negotiations, and government formation over the period. It was a similar story in last week’s equivalent for the manufacturing sector. It is a positive start for economic growth in the final quarter of the year.’
GBP NZD Exchange Rate Forecast: UK Political News in Focus
The UK cabinet is expected to discuss the Brexit ‘divorce bill’ early in the week, and any announcements relating to it could inspire significant movement in Pound Sterling (GBP) exchange rates.
Tuesday’s UK public sector net borrowing report could influence Sterling movement too, and could set the tone for UK Chancellor Philip Hammond’s Autumn Budget speech on Wednesday.
Other UK news to be aware of includes data the nation’s fresh Gross Domestic Product (GDP) projections, due out on Thursday.
As for the New Zealand Dollar, the currency could continue seeing mixed trade unless risk appetite recovers.
The ‘Kiwi’ could be lifted before the end of the week if New Zealand’s retail sales and trade data impresses.
Data Affecting This Week’s GBP/NZD Exchange Rate Forecast
21st November GBP Public Sector Net Borrowing (OCT)
21st November NZD Global Dairy Trade Price Index
22nd November GBP Autumn Budget
23rd November NZD Retail Sales (YoY) (Q3)
23rd November GBP GDP Growth Rate 2nd Est (YoY) (Q3)
23rd November GBP GDP Growth Rate 2nd Est (QoQ) (Q3)
24th November NZD Balance of Trade (OCT)
24th November GBP BBA Mortgage Approvals (OCT)