GBP/NZD Exchange Rate Rises on Slow UK Data Day
UPDATE: The Pound New Zealand Dollar (GBP/NZD) exchange rate has remained positive today, with Sterling hitting an inter-bank exchange rate of NZ$1.97.
This appreciation has been caused by Brexit optimism from Monday, as today’s economic data has been limited and relatively unsupportive.
Among the factors that are limiting GBP demand today are Monday’s Confederation of British Industries (CBI) reading for industrial orders, which fell from 7 points to -1 in September.
This negative result represents a drop-off in reported orders and led CBI Head of Economic Intelligence Anna Leach to remark:
‘Heightened fears of a ‘no-deal’ Brexit scenario have prompted some firms to move publicly from contingency planning to action.’
GBP/NZD Exchange Rate Rises despite Opposition’s Objection to PM’s Brexit Plan
The Pound (GBP) has made a moderate rise against the New Zealand Dollar (NZD) today, up to an inter-bank exchange rate of NZ$1.97.
This appreciation comes as part of a continued positive reaction to Monday’s Brexit news – the latest updates have been less supportive of Pound Sterling.
In the former case, Brexit Secretary Dominic Raab spoke positively about securing an agreement with the EU in the coming months, despite the Prime Minister warning of an ‘impasse’ in talks.
More recently, however, the opposition Labour Party’s shadow Brexit Secretary Sir Keir Starmer has rattled GBP traders by declaring that the party will likely vote against the PM’s Brexit plan.
The unnerving factor for GBP traders is that a majority rejection in the House of Commons could put the UK on the path to a no-deal Brexit.
Setting out his party’s case, Mr Starmer said:
‘Let me be very clear – if Theresa May brings back a deal that fails our tests – and that looks increasingly likely – Labour will vote against it. No ifs, no buts.’
Worries about US-China Trade Spat Cause New Zealand Dollar to Pound Exchange Rate Losses
The New Zealand Dollar (NZD) has fallen against the Pound (GBP) and is trading tightly against other peers today due to continued concerns about the US-Chinese trade disagreement.
While the conflict is currently limited to the US and China, the worry is that further deteriorations will have a negative impact on global trade and New Zealand’s economy.
GBP/NZD Forecast: Will Larger New Zealand Trade Deficit Cause Pound Sterling Rise?
This week, GBP/NZD exchange rate movement may be caused by today’s New Zealand trade balance reading and Wednesday’s Reserve Bank of New Zealand interest rate decision.
Both of these could push the Pound higher against the New Zealand Dollar, as a larger trade deficit is predicted alongside no change to interest rates.
A larger trade deficit will indicate more imports into New Zealand than exports, while another interest rate freeze could rattle NZD investors.
Wednesday evening will also bring the US Federal Reserve interest rate decision, which is expected to result in a rate hike from 2% to 2.25%.
The US Dollar often appreciates after a Fed rate hike; this could reduce risk sentiment, devalue the New Zealand Dollar and cause a mid-week GBP/NZD rate rise.
The next UK data isn’t out until Friday morning, when consumer confidence and GDP growth data is due.
Current expectations are for a faster pace of GDP growth, alongside worsening consumer sentiment.
The former could have the most impact, so a late-week GBP/NZD exchange rate rise isn’t out of the question.