Pound New Zealand Dollar (GBP/NZD) Exchange Rate Slides as Tory Party Leads in Polls
The Pound New Zealand Dollar (GBP/NZD) exchange rate edged lower today, with the pairing currently trading at around NZ$2.0056 as the Pound (GBP) came under pressure from domestic politics ahead of the December election.
Last week’s news that the Conservatives were leading in polls offered a boost to Sterling as the odds on the Tories winning the election and pushing through their Brexit deal increased. However, polls are widely perceived as an unreliable indicator as proven in both the last election and the Brexit referendum.
Commenting on this, Nomura’s FX strategist, Jordan Rochester said:
‘It’s too early to say who’s going to win and given that uncertainty foreign investors will hold back from being overweight UK assets.’
US-China Trade Optimism Buoys New Zealand Dollar (NZD)
The New Zealand Dollar (NZD) enjoyed an upswing of support at the start of the week thanks to a fresh bout of US-China trade optimism.
At the end of last week, US President Donald Trump suggested a US-China trade deal could be signed in Iowa, one of the states hardest hit by trade tariffs.
Trump also noted that negotiations between the two sides were going well and he hoped a deal would be signed once the ‘Phase One’ agreement was complete.
Meanwhile, on Monday China’s Foreign Ministry said that Chinese President Xi Jinping and President Trump has been in contact through ‘various means’.
Foreign Ministry spokesman, Geng Shuang said:
‘As for a meeting between the leaders of China and the United States, what I can say is that President Xi and President Trump have maintained continuous contact through various means.’
Sterling (GBP) Slumps as UK Business Activity Drops at Fastest Pace in Decade
This morning’s UK construction PMI remained below the no-change mark as new orders and employment continued to slide.
Sterling remained under pressure as business optimism within the sector was amongst the weakest since 2012 and civil engineering fell at the fastest pace in a decade.
Economics Associate Director at IHS Markit, Tim Moore commented:
‘UK construction companies experienced a downturn in business performance during October as political uncertainty and subdued economic conditions again combined to hold back sales. New orders have fallen in each month since April, which is the most prolonged period of decline recorded for more than six years.’
Pound New Zealand Dollar Outlook: Will Weak Employment Data Weigh on NZD?
Looking ahead to Tuesday, Sterling could extend its losses against NZD following the release of the UK services PMI.
The Pound is likely to slide if data reveals the services sector failed to claw its way out of contraction territory in October.
However, the ‘Kiwi’ could come under pressure following the release of upcoming employment data.
If the unemployment rate rises higher than expected during the third quarter, the Pound New Zealand Dollar (GBP/NZD) exchange rate could be left muted.