Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Edges Higher on Fresh Trade Uncertainties

Pound to New Zealand Dollar Edges Higher Ahead of Bank of England (BoE) Decision

Despite rising hopes this week that the US and China are approaching a trade deal, the Pound to New Zealand Dollar (GBP/NZD) exchange rate has been advancing as the New Zealand Dollar slumps and the Pound levels ahead of a Bank of England monetary policy decision.

Following last week’s slide from the interbank level of 2.02 to 2.01, GBP/NZD has largely regained those losses so far this week.

Still, GBP/NZD has been unable to hold all of its advance attempts amid market hesitance to buy the Pound (GBP), so the pair continues to trend in the region of 2.01 at the time of writing on Thursday morning.

Anticipation of the upcoming Bank of England (BoE) policy decision, as well as US-China trade war news, are likely to drive the Pound to New Zealand Dollar exchange rate in the coming sessions.

Pound (GBP) Exchange Rates Steady but Bank of England (BoE) Overshadows

A Bank of England (BoE) policy decision is typically an influential event for the Pound (GBP), and the British currency is currently steady in anticipation of today’s upcoming BoE meeting.

While the Bank of England isn’t expected to make any monetary policy changes, broad political uncertainties, Brexit and a recent raft of poor ecostats have led to predictions for dovish commentary which could weigh on Sterling.

According to Petr Krpata at ING:

‘The meeting should have a fairly limited impact on the Pound given that (a) the outcome of an early election should be the prime driver of Sterling in coming weeks; (b) the BoE’s interest rate path is conditional on the outcome of Brexit talks.’

This week’s slightly better-than-expected UK data has ultimately had little impact on the Pound outlook either, as Brexit uncertainty is now expected for an even longer period of time.

New Zealand Dollar (NZD) Exchange Rates Mixed on US-China Trade News

Most of this week’s GBP/NZD movement so far has been driven by New Zealand Dollar (NZD) movement, as the currency has seen volatile shifts in reaction to global trade developments as well as domestic New Zealand data.

Reports that the US and China would agree to remove some existing trade tariffs have bolstered risk sentiment and as the New Zealand Dollar is correlated to trade and risk, the news offered some support to the ‘Kiwi’.

However, market uncertainty persists, with some cynicism in the outlook for a resolution to the talks, particularly after some overnight news suggested the preliminary trade deal could be delayed.

NZD has also been weakened by data this week, with yesterday’s NZ job market report showing an unexpected rise in unemployment and weaker than expected employment.

Pound to New Zealand Dollar (GBP/NZD) Exchange Rate: Forecasts for Pound Slide

The Pound to New Zealand Dollar (GBP/NZD) is predicted to slide following today’s Bank of England (BoE) decision. While no changes are expected to the central bank’s monetary policy recent political and Brexit uncertainty is predicted to feature in policymaker commentary and any negative signals about the British economy could weigh on the Pound.

Added to this, lack of clarity over British politics and US-China trade relations are likely to remain in focus for the GBP/NZD pairing. Campaigns for next month’s UK general election will likely prove an influence on Pound movement, while the New Zealand Dollar (NZD) will focus on trade.

If the US and China show more signs that relations are improving, then trade-correlated currencies like the New Zealand Dollar are likely to strengthen.

New Zealand’s economic outlook is also weighing on the currency due to some recent weak data.

This will put the November Reserve Bank of New Zealand (RBNZ) policy decision centre stage next week, with investors keen to gain any insights the bank might provide on the current state of the New Zealand economy.

Josh Jeffery

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