Pound to New Zealand Dollar Exchange Rate Pressured as NZD Strengthens
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate continued to slide today, as despite a generally steadier Pound (GBP) the New Zealand Dollar’s (NZD) own appeal has risen and keeps pressure on the pair.
Following last week’s tumble from the interbank rate of 2.01 to 2.00, GBP/NZD has seen mixed movement this week but is currently trending even lower.
At the time of writing, GBP/NZD is trending in the interbank region of 1.99 – the pair’s worst level in over a month.
Investors are hesitant to move too much on the Pound as polls continue to show that the election race is tightening, while the New Zealand Dollar is benefitting from improved trade-sentiment.
Pound (GBP) Exchange Rates Pressured amid Third Poll Showing Tightened Election Race
Following a tumble from its highs yesterday, the Pound (GBP) saw steadier movement today.
Investors were hesitant to make big new moves on the currency as the latest UK polling continued to cause concern that Britain’s General Election next month could still lead to fresh political uncertainty.
Last night, the third poll this week showing a narrowed election race was published. The poll, from YouGov, showed the Conservative Party lead over the opposition Labour Party narrowing to 11 points.
This kept pressure on the Pound, as a tight race could lead to a hung Parliament and a higher chance of a worst-case scenario no-deal Brexit.
Some analysts pointed out that markets may have been too complacent over belief of a Conservative Party majority. According to Thu Lan Nguyen, FX Strategist at Commerzbank:
‘So far, the market has been relatively complacent when it comes to the risks ahead,
Yes, the Tories still have the lead but they’re certainly not gaining.’
New Zealand Dollar (NZD) Exchange Rates Up as Trade Outlook Appears to Improve
The New Zealand Dollar (NZD) is one of today’s better-performing major currencies, holding relatively closely to its best levels in a month versus the Pound (GBP).
This is largely due to the market’s higher demand for trade-correlated currencies, as well as the New Zealand Dollar’s stronger appeal compared to rivals like the Australian Dollar (AUD).
Market trade-sentiment has been relatively sturdy this week amid rising hopes that the US and China are closing in on a ‘phase one’ trade deal.
Overnight, US President Donald Trump expressed confidence that talks for a preliminary deal were in their ‘final throes’. These comments kept markets optimistic about trade.
On top of this, the New Zealand Dollar found some domestic trade support as New Zealand’s October trade results revealed a bigger than expected exports boost.
What’s more, the boost in exports came from trade with China, softening fears of the trade war’s continued impact on New Zealand’s economy.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Volatility Could Persist
Movement on the Pound (GBP) is mixed amid anticipation for upcoming UK polls and next month’s General Election, now just over a fortnight away.
As a result, Pound focus is likely to remain on polling, and movement could become even more jittery as the election draws nearer.
More solid movement may come from the New Zealand Dollar (NZD), depending on how US-China trade developments progress.
If there are any solid signs that a ‘phase one’ trade deal is getting nearer, market trade-sentiment would rise and the New Zealand Dollar would see less downside risk. This could keep GBP/NZD under pressure.
Pound to New Zealand Dollar (GBP/NZD) exchange rate investors will also closely watch upcoming New Zealand business confidence data tomorrow, and consumer confidence data on Friday.