Pound to New Zealand Dollar Exchange Rate Slides amid Lack of Fresh Sterling Support
UPDATE: Investors remained hesitant to support the Pound (GBP) on Wednesday as Brexit and UK political uncertainties persisted, making it easier for a stronger New Zealand Dollar (NZD) to push the Pound to New Zealand Dollar (GBP/NZD) exchange rate lower.
At the time of writing on Wednesday afternoon, GBP/NZD was trending back towards the week’s opening levels, after failing to hold the advances seen earlier in the week.
Investors were much more eager to buy the risk-correlated New Zealand Dollar, as market risk-sentiment was buoyed.
Speculation that the US Federal Reserve could be nearing the end of its rate hike cycle has left investors more willing to take risks.
GBP/NZD Exchange Rate Slumps despite New Zealand Dollar Weakened by Dairy Prices
The New Zealand Dollar (NZD) has been weakened by further decreases in dairy prices, yet despite this NZD is pushing back against Sterling after its losses yesterday.
Data released earlier showed that credit card spending in New Zealand had increased by 6.3% in October compared to a year earlier, bolstering the ‘Kiwi’.
At the same time, the latest UK public sector borrowing figures came out, revealing a worse-than-expected deficit of £8.8bn in October rather than the predicted £6.2bn, shooting up from the previous £2.84bn.
Currently, GBP/NZD is trading at NZ$1.87 on the inter-bank market, which is down around 0.7% on the day.
GBP/NZD Exchange Rate Rallies Yesterday on Carney’s Support for May’s Brexit Deal
The start of this week’s session saw the Pound begin to push back against the NZD as news of increased trade tensions between China and the US emerged.
The topic of Brexit, once again, fills UK headlines, with Bank of England (BoE) Governor Mark Carney showing his support for Prime Minister Theresa May’s draft Brexit deal in front of Parliament’s Treasury Select Committee.
Carney stated: ‘We welcome the transition arrangements in the withdrawal agreement and the possibility to extend the transition.’
Carney stressed that the most important part of the deal was the guarantee of a transition period which would provide more certainty for businesses, while a no-deal Brexit would cause ‘uncomfortably high’ risks for the economy and UK currency.
GBP/NZD Exchange Rate Pushed Back following Dairy Auction and US-China Tensions
Yesterday’s global dairy price auction saw a further decrease in prices by -3.5%, with products such as butter being hit by a -9.6% decrease and anhydrous milk fat suffering a similar fall.
Dairy prices, which have been falling for the past four months, are currently at a two-year low, allowing Sterling to push back against the ‘Kiwi’.
The risk-correlated currency has been hit recently by the US-China trade tensions, which were reignited over the weekend at the Asia-Pacific Economic Cooperation despite previous suggestions that they were cooling.
GBP/NZD Exchange Rate Could Slip Further as May Heads to Brussels
As the GBP/NZD exchange rate inches lower, the spotlight will continue to shine on Brexit, as Theresa May heads to Brussels,
The European Union missed its deadline yesterday to complete the text of its declaration on its future relations with the UK, with concerns being raised by several member states, including Spain and France.
With the Prime Minister’s leadership still being challenged by those submitting letters of no-confidence in her, the fate of Sterling over the coming days is likely to remain volatile.
Due to a lack of data further being released by either the UK or New Zealand, it seems likely that further GBP/NZD exchange rate fluctuations will be driven by US-China trade worries and Brexit.