Pound New Zealand Dollar Exchange Rate Steady, Risk-Off Market Mood Holds Back ‘Kiwi’

GBP/NZD Exchange Rate Rangebound, Coronavirus Threatens NZ Economic Growth

The Pound New Zealand Dollar (GBP/NZD) exchange rate held steady this morning, with the pairing currently trading around NZ$2.02 as market risk-off mood continues to hold back the risk-sensitive ‘Kiwi’.

Larry Kudlow, the Director of the US National Economic Council, also highlighted re-emerging tensions between the US and China, commenting:

‘We are a little disappointed that we haven’t been invited in and we’re a little disappointed in the lack of transparency coming from the Chinese. I don’t know what their motives are. I do know that apparently more and more people are suffering over there. Is the Politburo really being honest with us?’

With China being New Zealand’s largest trading partner, news of heightening uncertainty between the two superpowers, and ongoing concerns over the health of China’s economy, are compromising the market appeal of the New Zealand Dollar (NZD).

New Zealand’s Minister of Finance Grant Robertson comments:

‘Economists from banks, and also the international community are predicting that the [Coronavirus] could shave around 0.3 per cent off Chinese GDP.’

‘If that flows into New Zealand, you can make a calculation of around about 0.1 per cent – but that is just at the very, very early stages.’

GBP/NZD Exchange Rate Holds Steady following Boris Johnson’s Cabinet Reshuffle

The Pound (GBP) has remained steady against many of its peers this morning following Prime Minister Boris Johnson’s long-awaited post-Brexit cabinet reshuffle yesterday.

However, after the resignation of the former Chancellor Sajid Javid, who has now been replaced with Rishi Sunak, Pound investors are feeling increasingly confident that this will allow greater fiscal spending in the March budget.

Paul Dales, Chief UK Economist at Capital Economics, said:

‘[Sunak’s] voting history shows he is an ardent Brexiteer, supports reductions in corporation tax, cuts to capital gains tax and he has gone on the record as favouring infrastructure investment. So, this is either going to be a meeting of minds, or Sunak will be the Prime Minister’s yes man living in Number 11.’

Meanwhile, Brexit developments are holding back some of Sterling’s gains, after it was revealed that the EU are prepared to take a harder stance in trade negotiations with the UK.

Mark Carney, the Governor of the Bank of England (BoE), however, sees a silver lining to the UK economy after Brexit, saying:

‘In an environment where everything is getting a fresh look, it’s fertile ground for taking a step back and making bigger changes than otherwise might have been made.’

GBP/NZD Outlook: Could the ‘Kiwi’ Rise on Increasing Global Dairy Trade Prices?

New Zealand Dollar (NZD) investors will be looking ahead to Tuesday’s Global Dairy Trade Price Index, which is expected to flatline as 0%. However, if this manages to beat forecasts we could see the NZD/GBP exchange rise as New Zealand’s economic outlook improves.

Brexit developments will continue to dictate the GBP/NZD exchange next week. Any further indications of a possible UK-EU no-deal, however, would prove Pound-negative as uncertainty grows over the British economy going forward.