GBP/NZD Exchange Rate Ticks Lower on Latest IMF Warning
UPDATE: The Pound New Zealand Dollar exchange rate has dipped today, but remains near the best level since June 2016 regardless.
The latest GBP/NZD exchange rate slide has been caused by International Monetary Fund (IMF) warnings about the Brexit process.
IMF policymakers have suggested that a no-deal Brexit will cause significant UK and Eurozone economic damage, which puts more pressure on policymakers to agree on a workable deal.
Although the IMF consensus is that a deal will be reached in the end, this warning about the consequences of no-deal has still unsettled GBP traders.
Brexit Damage to UK Business Confidence Triggers GBP/NZD Exchange Rate Losses
The Pound Sterling New Zealand Dollar pairing (GBP/NZD) has fallen by -0.4% today, although the Pound remains near its best level since June 2016.
The latest GBP/NZD exchange rate losses have been caused by the morning’s UK business news, where two organisations have revealed falling confidence levels.
British Chambers of Commerce (BCC) Director General Adam Marshall has warned that:
‘We are stuck in limbo while Brexit negotiations rumble on.’
Along a similar line, Deloitte Chief Economist Ian Stewart has cautioned that:
‘Chief Financial Officers have become more pessimistic about the long-term effect of the UK’s departure from the EU.’
New Zealand Dollar to Pound (NZD/GBP) Exchange Rate Rises on Rumoured Fuel Price Cut
There has been little economic data out of New Zealand recently, but this hasn’t prevented an NZD/GBP exchange rate rise.
The latest national news to move the currency involves petrol prices in New Zealand, which are being pushed higher by a combination of a weaker NZD and a rising oil price.
In the face of higher prices, there has been growing pressure on the government to cut fuel taxes and relieve pressure on consumers and businesses.
Rankin Treasury Chairman Derek Rankin has predicted that the economy could benefit from slashed fuel prices, saying:
‘If you want the New Zealand economy to speed up, then just lower the petrol prices.’
GBP/NZD Forecast: Will Pound Sterling Drop if UK GDP Slows Down?
This week, Pound Sterling/New Zealand Dollar exchange rate movement may be caused by Tuesday’s New Zealand card spending stats, followed by Wednesday’s UK GDP data.
The card spending data could cause an NZD/GBP exchange rate rise if it shows increased activity during September, as this would suggest steady levels of consumer confidence.
For GBP traders, the week’s main data releases are all out on Wednesday.
The main data will be the morning’s GDP growth figure for August, which is expected to show a clear slowdown during the month.
If the reading does dip from July’s 0.3% figure to 0.1%, the Pound could slide in value against the New Zealand Dollar.
Slowing GDP growth will do little to reassure Sterling investors about UK economic stability and could spark fresh concerns about Brexit’s impact on the UK economy.
Beyond this data, the GBP/NZD exchange rate could also be affected by Wednesday’s UK production figures, alongside a trade balance reading.
The GDP data isn’t expected to print positively in every instance and a forecast-matching expansion of the UK trade deficit could ensure a Pound Sterling decline on the day.
The only other data to watch out for this week will be Thursday’s Business NZ PMI for September, which is tipped to make a minimal decline during the month.
An as-expected dip from 52 points to 51.8 might seem small on paper, but it could still enable a late-week GBP/NZD exchange rate recovery.