Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rallies Ahead of New PM Announcement
The Pound New Zealand Dollar (GBP/NZD) exchange rate strengthened even after Russian energy firm Gazprom announced indefinite closure of key pipeline to Europe.
At time of writing the GBP/NZD exchange rate is trading around $1.8866, a jump of 0.23% from this morning’s opening levels.
Pound (GBP) Buoyed by Prospect of Political Stability
The Pound is finding modest support today ahead of the announcement of the new prime minister, despite the looming threat of an energy crisis.
Lending some moderate support to the Pound is the announcement of the new prime minister. After several long months of drawn-out debate and uncertainty, both investors and the UK itself will be glad for a modicum of stability. With both candidates promising immediate fiscal aid, all eyes will be on the announcement later today.
Frontrunner Liz Truss is odds-on favourite to take the reins. Truss has already announced she fully intends to roll out substantial financial aid to combat the escalating cost-of-living crisis. A proposed energy bill freeze could save millions of UK households from falling into poverty. If a much-needed financial boost comes to fruition, the Pound could be buoyed as investors’ confidence in the UK economy returns.
However, on top of the mounting pressures from soaring energy prices and out of control inflation, the energy crisis is set to worsen in Europe. Russian state-owned Gazprom announced the indefinite closure of the key Nord Stream 1 pipeline. The timely announcement came only hours after G7 confirmed a price cap on Russian fuel, as leaders attempt to curb Putin’s war efforts.
Naeem Aslam, Chief Markets Analyst at Avatrade, warns of an impending energy crisis this winter:
‘The reality is that a conflict with Russia has sent the energy prices through the roof in Europe and in the UK. Consumers are struggling every day and worried about their energy bills. There is no short fix for this, given the nature of the economic health of the EU and UK, and a major disaster could be on the horizon.’
New Zealand Dollar (NZD) Wavers on Mixed Market Mood
The New Zealand Dollar softened in the wake of further downbeat economic data from China. Following an unexpected contraction in the manufacturing sector due to rising Covid cases and heatwave-related disruptions, China’s service sector saw a slowdown. Despite another month of slowing activity, the latest print still points to the third straight month of growth.
Moderately supporting the ‘Kiwi’ is the latest PMI data from Australia. With an expected contraction in both services and composite PMI, both expanded in the month of August. Combined with a surprising uptick in retail sales, both the
Pound New Zealand Dollar Forecast: New Prime Minister to Revive the Pound?
All eyes will be on the announcement of Boris Johnson’s replacement. After several long months of political volatility and uncertainty, the Conservative leadership finally comes to a head.
Meanwhile, a lack of major data for the New Zealand Dollar will leave the ‘Kiwi’ vulnerable to the wavering market mood. Any further developments in China could see further movement on the risk-sensitive ‘Kiwi’.