Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Rallies on UK Election Optimism
UPDATE: The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged higher on Tuesday afternoon, leaving the pairing trading at around NZ$2.0141.
The Pound continued to benefit from an upswing in UK election optimism, offsetting any potential gains in the ‘Kiwi’ as reports suggest the US tariffs will be delayed.
According to the Wall Street Journal, US and Chinese negotiators are preparing for the next round of tariffs scheduled for the 15th December to be delayed.
However, this did little to boost the risk-sensitive New Zealand Dollar against GBP which rallied on Brexit optimism.
The Wall Street Journal reported:
‘Chinese and U.S. officials involved in the talks say they don’t have a hard deadline.’
Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Edges Higher on Brexit Optimism
The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate edged higher on Tuesday, leaving the pairing trading at around NZ$2.0118.
The UK currency rose today, as the focus remains on Thursday’s UK election and the likelihood of a Conservative win.
Sterling rose at the start of the week as opinion polls revealed the Conservatives were ahead of Labour.
YouGov will release an update on their earlier MRP poll, which predicted a 68-seat Tory majority, this evening.
Meanwhile, the Office for National Statistics (ONS) showed the British economy stagnated in the three months to October. Annual expansion rose by 0.7%, the weakest expansion since March 2012.
Commenting on this morning’s data, an ONS spokesperson stated:
‘The UK economy saw no growth in the latest three months. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.
‘Construction also declined across the last three months with a notable drop in house building and infrastructure in October.’
However, this could do little to stop GBP rising against the ‘Kiwi’.
New Zealand Dollar (NZD) Muted as US Tariff Deadline Creeps Closer
The New Zealand Dollar slumped on Tuesday morning as traders held their breath ahead of the next US tariff deadline.
Tariffs are expected to kick in on 15th December on remaining Chinese exports unless negotiations result in some kind of preliminary deal.
Risk appetite edged up as global markets continued to bet on Washington and Beijing being able to reach a deal.
Added to this, Bloomberg reported the US were unlikely to implement tariffs. Speaking to Bloomberg, US Agriculture Secretary Sonny Perdue said:
‘We have a deadline coming up on the 15th December for another tranche of tariffs, I do not believe those will be implemented and I think we may see some backing away.’
Meanwhile, US President Donald Trump noted that he did not want to implement the tariffs, but did want to see ‘movement’ from Beijing.
However, data released this morning revealed that US trade pressures and a weakening demand have put further pressure on China.
China’s annual producer prices slumped for the fifth month in a row, while consumer prices rose at the fastest pace in almost eight years.
Pound New Zealand Dollar Outlook: Will GBP Continue to Rise?
Looking ahead to this evening, the New Zealand Dollar (NZD) may edge up against the Pound (GBP) following the release of retail sales data.
If New Zealand’s electronic retail card spending rebounds in November, it could provide the ‘Kiwi’ with an upswing of support.
Meanwhile, Sterling could rise, offsetting NZD gains if further polls reveal the Conservatives are likely to secure a majority in Thursday’s election.
If opinion polls show Boris Johnson is likely to remain Prime Minister and take the UK out of the EU, Brexit optimism could send the Pound New Zealand Dollar (GBP/NZD) exchange rate higher.