Pound to New Zealand Dollar Exchange Rate avoids losses despite Pound Profit-Taking
UPDATE: Some investors opted to sell the Pound (GBP) back from its best levels on profit-taking today, but the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate remained strong despite this.
Investors were hesitant to sell the Pound in favour of the New Zealand Dollar (NZD), as risky trade-correlated currencies like the New Zealand Dollar were unappealing.
A failed US-North Korea summit, combined with poor Chinese manufacturing data, made investors hesitant to take risks.
Pound to New Zealand Dollar Exchange Rate Surges on Brexit Speculation and Risk-Aversion
UPDATE: The Pound Sterling to New Zealand Dollar’s (GBP/NZD) rally extended on Wednesday afternoon, as investors remained optimistic about the chances of a no-deal Brexit being avoided.
Sterling (GBP) continues to benefit from falling no-deal Brexit bets, while the relatively risk-sensitive New Zealand Dollar (NZD) tumbled on fresh geopolitical jitters and concerns about China’s economy.
As China has strong trade connections with New Zealand, expectations that Chinese manufacturing contracted again in February left investors hesitant to take risks in anticipation of the report, due on Thursday morning.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Gains Extended amid Risk-Aversion
Despite lingering concerns that a no-deal Brexit remains on the table, the Pound (GBP) benefitted strongly from yesterday’s Brexit developments with the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate surging.
After opening the week at the interbank level of NZ$1.90, GBP/NZD briefly tumbled to a weekly low of NZ$1.89 before surging over two cents in recovery.
The GBP/NZD recovery continued at the time of writing on Wednesday as the New Zealand Dollar (NZD) was dragged lower by fresh risk-aversion.
As a result, GBP/NZD touched on its best levels in a month and is trending near those highs at the time of writing.
The risk-rally seen at the beginning of the week has fizzled out amid fresh geopolitical uncertainties, making it easier for the Pound to climb versus the New Zealand Dollar.
Pound (GBP) Exchange Rates Jump as No-Deal Brexit Bets Lighten
Tuesday saw a surge in Pound (GBP) demand, as the British currency pushed above its recent highs thanks to rising hopes in markets that the UK would be able to avoid a no-deal Brexit.
The UK government detailed plans for its next ‘meaningful vote’ on its Brexit plan, which will take place on 12 March.
If the government’s Brexit plan is blocked again, the government will offer a vote on whether Parliament supports a no-deal Brexit. If Parliament does not support a no-deal Brexit, a vote on a short extension will be offered.
While a no-deal Brexit remained on the table despite hopes that it could be ruled out, the Pound benefitted from signs that many MPs would vote against it.
According to Lee Hardman, Currency Analyst at MUFG:
‘For markets, the risk of a no-deal Brexit was already slim; now it’s almost vanished’
The chance to delay to leaving the EU has also been a slight relief to investors, though it does not resolve the issue of how to handle Brexit itself.
New Zealand Dollar (NZD) Exchange Rate Strength Limited amid Fresh Risk-Aversion
While US-China trade optimism bolstered market demand for riskier trade-correlated currencies like the New Zealand Dollar (NZD) at the beginning of the week, risk-sentiment was a little weaker today.
Investors were hesitant to take risks on Wednesday amid fresh geopolitical uncertainties, causing the New Zealand Dollar to drop.
As well as a lack of fresh developments in US-China trade talks since the beginning of the week, markets have been rattled by uncertainty ahead of a meeting between US President Donald Trump and North Korea Leader Kim Jong-un.
Military tensions between India and Pakistan put further pressure on risk-sentiment.
On top of market risk-aversion, the New Zealand Dollar was weighed by an underwhelming trade balance report. New Zealand’s trade balance was predicted to come in at N$-300m but instead printed at a deeper N$-914m.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Traders Await Brexit News and Trade Developments
While Brexit optimism continues to drive the Pound (GBP) higher, the British currency is still highly sensitive to potential Brexit developments.
The UK Parliament will hold Brexit debates today, and if these have any impact over how Brexit will unfold the Pound could see a notable shift in movement.
Any signs that a second referendum is becoming more possible may lead to a surge in Pound demand, whereas fears that MPs could support a no-deal Brexit would have the opposite effect.
Failing notable Brexit developments, the Pound could hold its ground on hopes that a no-deal Brexit will be avoided, and GBP/NZD may be more likely to be driven by upcoming data from China and New Zealand.
Thursday will see the publication of China’s February manufacturing PMI stats. Chinese data often influences risk-sentiment and trade-correlated currencies like the New Zealand Dollar.
New Zealand’s January business confidence stats tomorrow and February consumer confidence stats on Friday could also influence the Pound to New Zealand Dollar (GBP/NZD) exchange rate.