GBP NZD Exchange Rate Trending Lower on Market Sentiment
Hopes that the UK and EU could agree to a Brexit deal in the very near future have softened, which has softened the Pound to New Zealand Dollar (GBP/NZD) exchange rate’s appeal. Investors continue to find the New Zealand Dollar (NZD) appealing.
After opening this week at the interbank level of 1.91, GBP/NZD briefly jumped higher. This gain was short-lived though, and since then GBP/NZD has been trending with a downside bias.
At the time of writing, GBP/NZD has fallen lower and trends in the interbank region of 1.90.
GBP/NZD is only slightly higher than this week’s low, which is the worst level for the pair in over four months.
Pound (GBP) Exchange Rates Knocked by Brexit Uncertainty
At the beginning of the week, the Pound (GBP) saw a jump in demand on hopes that a UK-EU Brexit deal was imminent. However, Brexit jitters have worsened a little since then, amid a lack of perceived progress in talks.
There is concern that markets were becoming too optimistic on Brexit, as the risk of a no-deal Brexit persists.
The latest reports have caused speculation that talks have not been going well. There has seemingly been no movement on the issue of fishing rights.
UK Prime Minister Boris Johnson has also reasserted that there will be no extension to the Brexit transition period. These factors are all weighing on the Pound today.
New Zealand Dollar (NZD) Exchange Rate Slows after Impressive Gains
The New Zealand Dollar has been one of the biggest risers among major currencies this week. Today, NZD’s advances have been slowing as investors calm from the recent rally.
Investors have been buying the risk and trade-correlated New Zealand Dollar on higher market sentiment. Markets have been more optimistic amid a slew of good news, including coronavirus vaccine developments and US political uncertainties softening.
New Zealand Dollar appeal was also boosted by this week’s Reserve Bank of New Zealand (RBNZ) developments.
The RBNZ has been asked to consider house prices when setting rates. According to Dominick Stephens, Chief Economist at Westpac:
‘That might make the RBNZ less gung-ho about lowering interest rates in the near term,
We were forecasting OCR cuts in April, May and August, but that timing now looks less likely. We are reviewing our OCR forecasts and will update them in due course.’
GBP NZD Exchange Rate Could Continue to Tumble if Brexit Uncertainties Persist
The Pound could be in for continued losses in the coming sessions, if Brexit uncertainties worsen again.
Markets are still generally optimistic that a UK-EU Brexit deal will be made. However, comments from officials continue to signal that relations are mixed, the Pound could be in for further losses.
There is still a real risk of a no-deal Brexit. What’s more, the Pound could continue to be weakened by Britain’s coronavirus situation.
Meanwhile, the New Zealand Dollar could remain appealing on market sentiment and Reserve Banm of New Zealand speculation.
If the RBNZ does begin to target house prices more in setting its interest rates, the New Zealand Dollar may be in for further gains.
Next week’s UK PMI results and New Zealand trade stats will also be watched by Pound to New Zealand Dollar (GBP/NZD) exchange rate investors.