GBP/NZD Exchange Rate Flat as Markets Welcome Peterborough Election Outcome
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is trading in a narrow range this morning as GBP investors were relieved to see that the Brexit Party failed to get its first MP elected into Parliament.
At the time of writing the GBP/NZD exchange rate is virtually unchanged at NZ$1.9194, leaving the pairing just up from the two-month low struck earlier in the week.
Pound (GBP) Stable as Labour Clings onto Peterborough Seat
The Pound (GBP) is trading steadily against the New Zealand Dollar (NZD) and the majority of its other peers this morning as markets react to the by-election result in Peterborough.
Despite predictions in the run-up to the vote that Nigel Farage’s Brexit Party would secure its first MP, the new party was left disappointed as Labour managed to narrowly hold onto the seat.
The news comes as a relief to GBP investors as it suggests public appetite for a no-deal Brexit – the Brexit party’s only announced policy so far – is not set in stone.
Speaking after her victory Labour candidate, Lisa Forbes said:
‘Tonight’s result is significant because it shows that the politics of division will never win.’
However, any upside in the Pound is likely to be limited, with GBP investors well aware that even in the event of a second referendum the UK is likely to remain split down the middle on whether to stay or leave the EU.
New Zealand Dollar (NZD) Steady Following Drop in the US Dollar (USD)
At the same time, the New Zealand Dollar (NZD) is holding its ground this morning as demand for the risk-sensitive currency remains buoyed following the recent drop in the US Dollar (USD).
The US Dollar has come under considerable pressure over the last week as analysts increasingly speculate that the Federal Reserve will be forced to cut interest rates later this year.
However, the resulting uptick in market risk appetite has been kept in check somewhat by a slide in commodity prices, which has prevented the ‘Kiwi’ from appreciating.
GBP/NZD Exchange Rate Forecast: Sterling Volatility Likely on Heightened UK Political Uncertainty
Looking ahead to next week’s session, the Pound New Zealand Dollar (GBP/NZD) exchange rate may be hit by increased volatility, driven by heightened political uncertainty in the UK as the Conservative leadership race officially begins.
This is could result in Sterling sentiment diving next week if a hardline Brexit supporter appears to take an early lead for fears this will increase the chances of a no-deal Brexit.
However the Pound may fare better on the data front, with GBP exchange rates likely to strengthen if the UK’s latest employment figures reveal domestic wage growth bounced back in May.
Meanwhile, the continued absence of any notable New Zealand economic data could limit the upside potential of the ‘Kiwi’ next week as it is left vulnerable to US-China trade developments.