GBP/NZD Forecast: Pound to New Zealand Dollar Exchange Rate Tight as Brexit Issues Considered

Unsolved Problems with Brexit Process Keep GBP/NZD Exchange Rate Close

The Pound to New Zealand Dollar exchange rate (GBP/NZD) has showed continued minor losses on Monday’s afternoon session.

Sterling has been left unsupported as traders look at the Brexit process so far, which is still dotted with unresolved issues.

Among the many problems is that state of shipping after the UK exits the EU.

In the worst-case scenario, analysts have warned of continuous queues at UK ports due to enhanced customs controlled.

Summing up the potential problems, James Hookham of the Freight Transport Association has said;

‘Even a small delay of two additional minutes per truck could result in tailbacks of 29 miles at the borders during peak hours.

This would create uncertainty and potential damage to deeply integrated and time-sensitive supply chains’.

Lagging UK Productivity Worsens Pound to New Zealand Dollar Exchange Rate

The Pound to New Zealand Dollar exchange rate (GBP/NZD) dropped by -0.3% today, following a warning about UK productivity levels.

Research from the think tank Conference Board suggests the UK will be in second place to the Eurozone this year, likely because of Brexit uncertainties.

The company has estimated UK that economic growth will struggle to reach 0.8% this year, compared to 1.1% in the single currency bloc.

Bart van Ark, Chief Economist at the Conference Board, has implied that UK productivity may not pick up even with falling unemployment, stating:

‘The UK economy keeps performing consistently below European productivity growth, even as labour markets are tightening.’

New Zealand Dollar to Pound (NZD/GBP) Exchange Rate Rises as New RBNZ Governor Arrives

The latest New Zealand Dollar gains have been triggered by the optimistic outlook of the new governor of the Reserve Bank of New Zealand (RBNZ).

Adrian Orr has replaced Graeme Wheeler in the top position and has already boosted the New Zealand Dollar with a positive assessment of the economy.

Mr Orr’s brief but effective statement read:

‘[I am] very, very pleased with the economic statement of New Zealand over recent years.’

Not everyone was so positive about New Zealand’s current position, however. Roger J Kerr of PricewaterhouseCoopers has warned about the effect of trade wars by saying:

‘The tit-for-tat retaliatory trade tariff announcements and measures between the US and China are not good news for the US economy, the Chinese economy and the global economy. For an export/import economy like New Zealand, relying on free global trading conditions, the recent development towards outright trade wars is very bad news indeed.’

GBP/NZD Exchange Rate Forecast to fall on UK GDP Slowdown

This week, Pound/New Zealand Dollar exchange rate movement may be most strongly-affected by a decline in UK GDP growth rates.

Before the GDP data comes out, however, the GBP/NZD exchange rate could appreciate on Wednesday if the CBI trading index shows forecast-matching growth.

The high-impact Q4 UK GDP stats will be out on Thursday morning and are expected to show a year-on-year and quarter-on-quarter slowdown.

Slowing GDP growth at the end of 2017 may cause concern among GBP traders, potentially triggering a Pound to New Zealand Dollar exchange rate slump.

UK business investment stats for Q4 2017 are also out on Thursday, although these may provide some light relief if they show forecast-matching year-on-year growth.

Although business investment is not considered a key gauge of Brexit’s effects on the economy, rising investment levels could still boost confidence among GBP traders.

The week’s last UK data of note will be Friday’s GfK consumer confidence reading for March; this may have little impact on Sterling as it is tipped to stagnate at -10 points.

On the other side of the pairing, the New Zealand Dollar may see movement this week from business confidence and building permit stats out on Wednesday.

The ANZ business confidence reading for February is tipped to improve, while any reported growth in building permits could also boost the New Zealand Dollar.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon