Pound to New Zealand Dollar Exchange Rate Steady despite US-China Trade Jitters
Despite concerns that trade tensions between the US and China could be about to worsen again, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is trending relatively flatly today so far.
After surging from the interbank level of NZ$1.97 to NZ$1.99 last week on the back of Brexit developments and US trade uncertainties, GBP/NZD is currently trending pretty closely to its best levels since the 2016 Brexit vote.
Still, GBP/NZD has been unable to hold the two-year-high of NZ$2.00 it briefly saw in the middle of last week.
Investors are hesitant to sell the New Zealand Dollar (NZD) much lower without good reason, as some analysts already perceive the currency to be undervalued.
However, the Pound (GBP) remained steadfast against the New Zealand Dollar on Monday as investors anticipated more potential Brexit developments, as well as remaining anxious about US-China trade tensions.
Pound (GBP) Exchange Rates Steady as Investors Await Brexit Developments
Last week, the Pound (GBP) saw a notable boost in support in reaction to comments from EU Chief Negotiator Michel Barnier.
Barnier said it would be ‘realistic’ to believe that a UK-EU deal could be agreed within the next eight weeks, ahead of a major UK-EU summit set for November.
This doused market fears that a ‘no-deal Brexit’ was possible and helped the Pound to make a more solid recovery from its worst levels.
Investors are now anticipating an EU summit on Thursday, when analysts speculate more notable progress could be made on Brexit talks.
According to Chris Turner, head of Forex Strategy at ING:
‘Sterling could out-perform this week if the EU decide to adopt a more flexible stance on Brexit at the EU summit.’
New Zealand Dollar Exchange Rates Avoids Worst Levels despite Trade Jitters
While the New Zealand Dollar (NZD) was able to avoid further falls against Sterling (GBP) on Monday, it failed to appreciate due to concerns about trade tensions between the US and China continued to weigh.
According to Jarrod Kerr, Chief Economist from Kiwibank:
‘The New Zealand dollar continues to fall under the shadow of US dollar strength, downbeat NZ business confidence, falling dairy prices, emerging market stress, Chinese yuan depreciation, and of course the constant threat of US trade tariffs.’
As New Zealand has strong trade connections to both the US and China, concerns of escalating conflict continue to impact the ‘Kiwi’.
The New Zealand Dollar has avoided further losses to the Pound thanks to a key support level being reached. GBP/NZD is unlikely to break through the key level of NZ$2.00 without a noteworthy reason, as once this level is reached the currency will be seen as undervalued and investors will buy into it.
Investors are also hesitant to sell the ‘Kiwi’ ahead of this week’s key New Zealand data releases, including the latest growth figures.
Pound to New Zealand Dollar (GBP/NZD) Traders Anticipate New Zealand Growth Report and EU Summit
With noteworthy UK and New Zealand ecostats due in the coming days, as well as the EU summit on Thursday, GBP/NZD could be in for a busy week.
Tuesday will see the publication of September’s second Global Dairy Trade auction. As dairy is New Zealand’s most lucrative commodity, this could influence NZD movement if it surprises.
However, New Zealand Dollar investors are more likely to await Thursday’s Asian session, when New Zealand’s key Q2 Gross Domestic Product growth rate report will be published.
The yearly growth rate is forecast to have slowed from 2.7% to 2.5%, with the quarterly growth rate expected to accelerate from 0.5% to 0.7%.
As for the Pound, Wednesday will see the publication of Britain’s August Consumer Price Index (CPI) inflation rate which could prove influential.