Pound New Zealand Dollar (GBP/NZD) Exchange Rate Stumbles ahead of Truss Press Conference
The Pound New Zealand Dollar (GBP/NZD) exchange rate is on the back foot this morning. Investors are cautious ahead of a press conference from UK Prime Minister Liz Truss.
At the time of writing the GBP/NZD exchange rate is trading around NZ$1.9975, which is roughly down 0.3% from this morning’s rate.
Pound (GBP) Set to Rebound if Budget Reversal is Announced
The Pound (GBP) is down against the majority of its peers this morning as rumours about the poorly received mini budget continue to guide the European trading session.
This follows yesterday’s session which saw the Pound soar as the government were said to be in ‘active’ discussions about perusing another mini budget reversal. This cheered investors, who have had doubts about Chancellor Kwasi Kwarteng’s ‘growth plan’ for weeks.
Expectations for a U-turn have risen after Kwarteng left his meeting with the International Monetary Fund (IMF) early to fly back to the UK today. Although sources within the treasury have tried to downplay the significance of Kwarteng’s early departure:
‘[I]s all about the medium-term fiscal plan … The chancellor wanted to make sure he had as wide a range of colleagues as possible engaged with it’.
GBP investors have grown cautious ahead of an expected press conference from Liz Truss later today.
Observers expect the PM to announce a U-turn on plans to freeze corporation tax. Confirmation of which could breathe new life into the Pound later today.
New Zealand Dollar (NZD) Mixed amid Fluctuating Market Mood
The New Zealand Dollar (NZD) initially rallied this morning amid a notable uptick in market risk appetite.
Equity markets were up this morning, buoyed by the prospect of the UK’s mini-budget U-turn
Investors have previously raised concerns that the UK’s fiscal turmoil could ripple through developed markets.
Credit Suisse’s head of UK economics, Sonali Punhani said:
‘Owing to the market turmoil that has followed the announcement of the mini-budget, risks are rising that the recession in the UK is deeper than we forecast.’
However, the ‘Kiwi’ has since relinquished some of its gains as a resurgent US Dollar (USD) begins to weigh on market risk appetite.
Pound New Zealand Dollar Exchange Forecast: GBP to Soar on Mini Budget Changes?
Looking ahead movement in the Pound New Zealand Dollar exchange rate will likely be driven by developments within the mini budget.
GBP investors will be focusing on announcements from the Truss and Kwarteng. If the rise in corporation tax is cut from the budget, Sterling could enjoy tailwinds.
Looking at the New Zealand Dollar in lieu of any significant data, the high-yield ‘Kiwi’ will likely continue to trade on risk appetite