Pound New Zealand Dollar (GBP/NZD) Exchange Rate Slumps after RBNZ Decision
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped overnight, with the pairing currently trading at an inter-bank rate of NZ$1.9018.
The Reserve Bank of New Zealand (RBNZ) left interest rates unchanged at a record low of 1.5% following its latest policy decision.
In the statement, the central bank revealed that a global slowdown is hurting the economy, the RBNZ said:
‘The global economic outlook has weakened, and downside risks related to trade activity have intensified.
‘Given the downside risks around the employment and inflation outlook, a lower OCR may be needed.’
Added to this, the minutes of the RBNZ review revealed that policymakers discussed whether to cut rates and decided that more monetary easing was ‘likely to be necessary’ over time.
New Zealand Dollar (NZD) Rallies as Risk Appetite Rises
New Zealand Dollar (NZD) exchange rates rallied on Wednesday despite a dovish RBNZ as risk appetite rose.
Reports suggest that the United States is willing to suspend an additional $300 billion worth of trade tariffs after the meeting between US President Donald Trump and Chinese Premier Xi Jinping.
The two leaders are expected to meet on the sidelines of the G20 summit on Saturday.
The Trump administration has stated that the goal of the meeting is reestablish a path towards a trade agreement after negotiations broke down in May.
No-Deal Brexit Uncertainty Leaves Pound Sterling (GBP) Exchange Rates Under Pressure
Pound Sterling (GBP) exchange rates remained under pressure on Wednesday as the Conservative leadership contest continued.
Both Boris Johnson and Jeremy Hunt have said they will be able to renegotiate a Brexit deal, despite the EU stating this was not possible.
Johnson has insisted that the UK must leave the EU on 31 October ‘deal or no deal’ and challenged Hunt to make the same commitment.
However, Jeremy Hunt has said that while he would leave the EU without a deal, he would not if there was the ‘prospect of a better deal.’
Meanwhile, former Brexit Secretary Dominic Raab has accused Hunt of showing ‘weakness’ and ‘naivety’.
Speaking to BBC Radio 4’s Today programme, Raab stated:
‘The minute you start flirting with an extension, you undermine your negotiating leverage.’
Pound New Zealand Dollar Outlook: Will Higher Than Expected NZ Business Confidence Buoy NZD?
Looking ahead to Thursday, the New Zealand Dollar (NZD) could rise against the Pound (GBP) following the release of June’s ANZ business confidence.
If business confidence rises higher than forecast, it could provide an upswing of support for the ‘Kiwi’.
Meanwhile, at the start of Friday’s session Sterling could fall following the release of the UK GfK consumer confidence survey.
If data shows consumer confidence has slumped further than expected, it could cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to slide.