Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as New Zealand Promises Household Support

(Updated 16:37 19/05/22)

The Pound New Zealand Dollar (GBP/NZD) exchange rate continued to slide today. A weakened US Dollar (USD) helped to bolster the New Zealand Dollar (NZD). This in turn pushed the currency pair lower. Expectations of a rate hike from the Reserve Bank of New Zealand (RBNZ) may also contributed to GBP/NZD’s drop.

At time of writing the GBP/NZD exchange rate is at around $1.9509, which is down around -0.5% from this morning’s opening figures

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Dips amid USD Pullback

The Pound New Zealand Dollar (GBP/NZD) exchange rate is losing ground today. An optimistic budget for New Zealand is likely pushing the currency pair lower. A weakened US Dollar (USD) may also causing a decline in GBP/NZD, as well as fears of an early UK recession.

At time of writing the GBP/NZD exchange rate is at around $1.9548, which is down around -0.4% from this morning’s opening figures.

New Zealand Dollar (NZD) Bolstered by Upbeat Budget Statement

The New Zealand Dollar (NZD) is being boosted against its competitors today after an optimistic budget forecast. The country plans to spend more than $1B NZD in order to help households cope with surging inflation.

The NZ government is planning to give around 2.1 million people weekly payments from August to October. Finance Minister Grant Robertson said the measure was an attempt to combat the country’s own cost-of-living crisis.

Speaking on the announcement, Robertson said:

‘Budget 2022 is being delivered against the backdrop of a global inflation spike, with existing supply chain pressures being exacerbated by pressure on oil prices from the war in Ukraine.’

A drop in China’s Covid-19 case numbers may also be supporting the ‘Kiwi’ today as Shanghai seeks to end its lockdown restrictions in the coming weeks.

Pound (GBP) Trends Higher Despite Downbeat Outlook

The Pound (GBP) is climbing higher against many of its rivals today amid a risk-off market mood. Sterling is struggling against the New Zealand Dollar (NZD) and Australian Dollar (AUD) however.

Major gains for GBP are likely to be limited by the ongoing recession fears. Figures on Wednesday showed inflation in April hitting a 40-year high of 9%. Soaring prices for energy, fuel, and groceries were thought to be the main drivers.

The country’s ongoing cost-of-living crisis has ncreased pressure on Chancellor Rishi Sunak to provide support for households and businesses. On Wednesday, Sunak delivered a speech to the Confederation of British Industry’s (CBI) in which he promised to cut business taxes in his autumn budget.

Reception to the speech was frosty however. CBI director general Tony Danker felt that Sunak needed to do more:

‘Look, you have to help the hardest hit now. Helping people with heating bills and eating bills will not fuel inflation. And you need to stimulate business investment now. That’s not going to overheat the economy now.’

The UK’s attempts to undermine aspects of the Northern Ireland Protocol may also weigh on the Pound today. There are concerns that attempts by the UK government to undermine the agreement through legislation could prompt a UK-EU trade war.

Additionally, fresh reports the Metropolitan Police’s ‘partygate’ enquiry has come to an end could dent confidence in Sterling.

GBP/NZD Exchange Rate Forecast: Will UK’s Retail Sector Continue to Suffer?

Looking ahead for the Pound (GBP) a forecast further drop to UK retail sales could limit gains on Friday. Whilst the drop in sales is expected to slow, the country’s retail sector is still set to struggle amid the UK’s cost-of-living crisis.

For the New Zealand Dollar (NZD), the country’s trade deficit is forecast to widen further in April after a slight recovery in May. The figures could pull NZD lower amid fears of a global economic slowdown.

Gareth Monk

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