GBP/NZD Exchange Rate Drops -0.3% ahead of UK Inflation Rate Release
The Pound (GBP) has been struggling against the New Zealand Dollar (NZD) today, as Brexit-related tensions rise and uncertainty grows regarding UK inflation levels.
In the former case, recent comments from Foreign Secretary Boris Johnson have raised the risk of MPs pushing for an economically-risky ‘Hard Brexit’.
Discussing the status of post-Brexit ties to the European Union, Mr Johnson said:
‘I’m convinced that the Prime Minister will be true to her promises of a Brexit deal that sees Britain will come out of the customs union and single market, have borders as frictionless as possible, reject ECJ [European Court of Justice] interference, control immigration and be free to conduct unhindered free trade deals across the world.’
This statement risks stirring up MPs against any UK links to the EU after Brexit, which in turn increases the chances of a ‘Hard Brexit’.
Weaker New Zealand Dollar Raises Trade Hopes, Pushes NZD/GBP Exchange Rate Higher
The New Zealand Dollar to Pound (NZD/GBP) exchange rate has risen by 0.3% today, thanks to rising optimism about New Zealand’s trade prospects.
Although currency devaluation can be bad news, in New Zealand’s case the weakening New Zealand Dollar (NZD) has raised hopes about future trading.
The main focus is on exports – a softer NZD will make it more affordable for international buyers to buy New Zealand’s export commodities.
Considering the benefits of a weaker NZD, ANZ Senior Strategist Phil Borkin said:
‘That low currency, together with higher commodity prices, is a pretty powerful stimulative force.
‘It is one of the reasons why we think the [NZ] economy can record some decent periods of growth, despite the housing market cooling.’
GBP/NZD Forecast: UK Inflation Data to Cause Pound Exchange Rate Advance?
This week, Pound/New Zealand Dollar (GBP/NZD) exchange rate movement is likely to be driven by UK inflation rate data, along with retail sales and GDP growth rate figures.
The high-impact inflation rate readings are out on Wednesday and are predicted to show rising month-on-month price growth during April.
On the other hand, core year-on-year inflation, which cuts out fuel and food costs, is forecast to fall slightly.
Both results could cause Pound movement; higher inflation risks another UK wage squeeze, while falling price growth lowers the chances of a Bank of England (BoE) interest rate hike.
Thursday’s retail sales stats might be more supportive if they show forecast-matching growth; this could reassure traders after March’s disappointing sales slump.
Finally, the Pound may fall back against the New Zealand Dollar on Friday as UK GDP growth is tipped to have slowed in the first quarter of 2018.
There will only be one major data release from New Zealand this week – Wednesday evening’s trade balance reading for April.
This is predicted to show a recovery from a trade deficit of NZ$-86m to a surplus in the region of NZ$470m.
As the Pound could be weakened after Wednesday morning’s inflation rate announcements, the New Zealand Dollar could rise on the day.
GBP/NZD Exchange Rate Declines as Brexit Limits UK Business Registrations
The Pound (GBP) has continued to decline against the New Zealand Dollar (NZD) today, owing to growing concerns about UK business.
Data from Companies House shows that business registrations in the UK by French and Dutch companies are falling.
There was a -48% drop in French registrations over 2016-17, while Dutch business registration fell by -52% over 2015-16.
These falling figures have been blamed on the uncertainty caused by Brexit negotiations and could worsen in the coming months.