GBP/NZD Exchange Rate Rockets after Theresa May Pushes for Cross-Party Conclusion

GBP/NZD Exchange Rate Boosted on Hopes of Brexit Stalemate being Broken

UPDATE: The Pound New Zealand (GBP/NZD) exchange rate rose by 0.8% following Prime Minister Theresa May’s urging of MPs to secure a cross-party Brexit consensus as early as next week.

This has buoyed the Sterling as markets react positively to signs of a possible breaking of the political deadlock.

The New Zealand Dollar (NZD), meanwhile, has sunk on easing Chinese manufacturing data, as New Zealand’s closest trading partner shows signs of slowing down despite Beijing’s recent stimulus measures.

The Chinese Caixin Manufacturing PMI for April fell below the expected rise to 51.0, to 50.2, drawing it closer to contraction.

GBP/NZD Exchange Rate Edges Higher as NZ Economy Suffers on Gloomy Forecast

The Pound New Zealand Dollar (GBP/NZD) exchange rate edged higher today and is currently trading around NZ$1.946 on the inter-bank market.

The New Zealand Dollar (NZD) weakened against the Pound (GBP) following the publication of the NZ business confidence figures for April, which slipped at 37.5.

Sharon Zollner, a Chief Economist at ANZ New Zealand, was also gloomy, saying:

‘The New Zealand economy is experiencing a soft patch that is proving reasonably long-lasting… [and] this [i.s likely] to remain the case out to the middle of this year.’

New Zealand’s improved activity outlook for April, which came in above forecast at 7.1%, failed to move the ‘Kiwi’.

Sterling (GBP) rose against the New Zealand Dollar despite the UK’s GfK consumer confidence figures holding steady at -13.

Joe Staton, a Client Strategy Director at GfK remained relatively upbeat, saying:

‘Despite political carry-on in the Westminster bubble with the clock ticking on Britain’s eventual departure from the EU, consumers are holding firm and remain unshaken by the daily headlines of turmoil and intrigue, although we remain in negative territory.’

NZD/GBP Exchange Rate Sinks as Chinese Manufacturing Eases

Today’s Chinese data has also weighed on market sentiment in the New Zealand Dollar, with China being New Zealand’s closest trading partner.

The publication of the Chinese Caixin Manufacturing PMI figures for April fell below the forecasted 51.0 to 50.2, leaving many ‘Kiwi’ traders concerned over signs of a global economic slowdown. Chinese non-manufacturing PMI figures also eased at 54.3.

The Chinese Federation of Logistics and Purchasing said in its statement:

‘The slight decline in PMI this month is a normal adjustment. Market supply and demand growth declined slightly, but still at a relatively good level.’

Many New Zealand Dollar (NZD) traders will be awaiting the publication of the NZ employment change figures for the first quarter this evening.

These will also be followed by the unemployment rate figures for the first quarter, and with any signs of improvement, this could lend some support for the struggling ‘Kiwi’.

GBP/NZD Exchange Rate Rises as Cross-Party Talks Buoy Brexit Hopes

The Pound (GBP) has risen on renewed Brexit hopes as cross-party talks between the Labour and Conservative parties seem to be showing some signs of compromise.

Michel Barnier, the EU’s Chief Brexit Negotiation, has also put pressure Parliament to break the political deadlock, saying:

‘Talks are still ongoing in London. That is where the deadlock must be broken. We are hoping to see the results of the cross-party talks this week.’

Prime Minister Theresa May has also echoed this statement, saying that cross-party talks must conclude by the end of next week.

The Labour Party are also in talks to include the possibility of a second-referendum in their European election manifesto, providing some Pound traders with some relief on the heightened likelihood of the UK remaining in the EU.

GBP/NZD Forecast: Sterling Could Rise on Cross-Party Conclusion

New Zealand Dollar (NZD) traders will be looking ahead to tomorrow’s printing of the NZ building permits figures for March, which, however, are expected to sink.

Chinese markets will be closed for the bank holiday Labour Day tomorrow, leaving many ‘Kiwi’ traders focusing on global political developments instead.

Pound investors will be awaiting tomorrow’s UK Markit Manufacturing PMI figures for April, which are expected to ease at 53.0.

The Pound New Zealand Dollar (GBP/NZD) exchange rate will remain sensitive to cross-party talks this week, which are expected to heat up as both May and Barnier push for a conclusion.

David Moore

Contact David Moore