Pound Sterling to New Zealand Dollar Exchange Rates Fluctuate on Brexit Developments
The Pound to New Zealand Dollar (GBP/NZD) exchange rate plunged when markets opened on Monday in reaction to Brexit concerns and the appointment of new Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr.
GBP/NZD ended last week relatively flatly after wide fluctuations, but the pairing declined by over 1% on Monday.
Last week’s Brexit news has not made markets optimistic enough to notably improve the Pound outlook as traders are still concerned that the UK-EU trade talks may not begin for a few months.
Sterling investors had hoped that if the UK and EU reached an agreement on the first phase of Brexit talks, the second phase (including trade talks) would be quickly unlocked.
However, reports have emerged that trade talks are unlikely to begin until February at the earliest – just over a year from when the UK is supposed to leave the EU.
On Monday, UK Prime Minister Theresa May claimed there was a new ‘sense of optimism’ among negotiators, but Sterling remained weak.
New Zealand Dollar Exchange Rate Bolstered by RBNZ Governor Appointment
New Zealand Dollar (NZD) exchange rates saw a surge in demand on Monday morning as investors reacted positively to the announcement of the Reserve Bank of New Zealand’s (RBNZ) next Governor.
Orr will be heading up the bank for a 5-year term from March 2018. Markets were enthused by his previous experience as a Deputy Governor of the bank and chief economist at Westpac.
His appointment was announced by acting Governor Grant Spencer, who has been standing in since previous Governor Graeme Wheeler’s term ended in September 2017.
Markets were initially concerned that New Zealand’s new Labour Party government would have the bank focusing more heavily on employment, with less focus on tackling inflation.
However, analysts are confident that Orr will oversee the government’s review of the Reserve Bank Act and the bank’s new mandates while still addressing inflation.
According to former RBNZ official Michael Reddell;
‘He’ll be able to tell a good story about how the Reserve Bank fits into what the government’s trying to achieve, in that sense it’s probably a political win for the government.’
Data Affecting This Week’s GBP/NZD Exchange Rate Forecast
11th December GBP Inflation Rate (MoM) (NOV)
11th December GBP Inflation Rate (YoY) (NOV)
13th December NZD Food Inflation (YoY) (NOV)
13th December GBP Unemployment Rate (OCT)
13th December GBP Average Earnings incl. Bonus (OCT)
13th December GBP Claimant Count Change (NOV)
14th December GBP Retail Sales (YoY) (NOV)
14th December GBP BoE Interest Rate Decision
15th December NZD Business NZ PMI (NOV)
15th December NZD ANZ Roy Morgan Consumer Confidence (DEC)
Pound New Zealand Dollar Exchange Rate Forecast: UK Inflation Report in Focus
With the Bank of England (BoE) due to deliver its December policy decision on Thursday, Pound traders will be turning their attention to UK data in the coming days.
Tuesday in particular could be influential for Sterling, depending on the results of Britain’s November Consumer Price Index (CPI).
UK inflation is forecast to have remained at 3% year-on-year in November and risen slightly to 0.2% month-on-month.
If the inflation print isn’t as high as expected, the Pound is likely to weaken as investors will have less reason to hope that the Bank of England (BoE) will be persuaded to tighten UK monetary policy in 2018.
Britain’s latest job market data is due on Wednesday, and could also influence the direction taken by the Pound ahead of Thursday’s Bank of England (BoE) policy meeting and all-important EU summit.
The New Zealand Dollar could remain strong in the coming days if markets remain optimistic for the future of the Reserve Bank of New Zealand (RBNZ).