GBP/NZD Exchange Rate Creeps Higher as Chinese Vehicle Sales See Biggest Monthly Drop Since 2012
The Pound New Zealand Dollar (GBP/NZD) exchange rate has eked out a modest gain of 0.2% today and is currently trading around NZ$1.823 on the inter-bank market.
GBP/NZD edged higher today following the publication of the year-on-year Chinese vehicle sales figures for January, which came in at -15.8% – the biggest monthly drop since 2012.
China is one of New Zealand’s biggest trading partners, so any signs that the Chinese economy is struggling have a tendency to weigh on NZD.
Gu Yatao, a Chinese auto analyst at Roland Berger, commented:
‘Downward pressure is still there… The government isn’t adopting stimulating policies to give the market a shot in the arm.’
Meanwhile, the risk-averse New Zealand Dollar failed to derive any benefit from the news that US-China trade talks are due to recommence in Washington this week.
Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as May Rallies for Brexit Support
Meanwhile in Brexit news, Prime Minister Theresa May has written to all 317 Conservative MPs in a bid to gain backing for her Brexit deal, and with time ticking down to the 29 March UK leaving date, the Pound remains on edge.
The Culture Secretary, Jeremy Wright, commented that there are ‘a number of different ways’ around the parliamentary deadlock, saying:
‘I don’t think it’s the mechanism that matters, it’s the objective… Parliament needs to give the prime minister space to have that conversation with Brussels.’
Today also saw a further divide within the Labour party following the resignation of 7 Labour MPs, with Ann Coffey, an MP for Stockport, commenting on her resignation:
‘The current leadership has been very successful at changing the party beyond recognition… Loyalty cannot be an end in itself.’
NZD/GBP Exchange Rate Struggles amid US-China Trade Talk Uncertainty
Higher-risk currencies like the New Zealand Dollar are struggling to exert themselves after last week’s US-China trade talks in Beijing sent out mixed-signals.
Mark Jolley, a global strategist at CCB International Securities, saying:
‘Look at how weak [Asian] markets were on Friday, look how strong they [were] today. They’re very volatile and this volatility that we’re seeing on a day-to-day basis is actually, you know, a sign that people are not that sure what’s … going on.’
There are also concerns about New Zealand’s own strained relations with China following reports that goods exporters are facing difficult clearing customs, while Chinese tourists are being discouraged from traveling to New Zealand.
GBP/NZD Forecast: Pound Could Rise if UK Average Earnings Increase
While Brexit headlines will remain in focus, the GBP/NZD exchange rate could advance on Tuesday if the UK’s latest employment figures impress.
An increase in average earnings would be GBP supportive.