Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as UK Leadership Race Begins
The Pound New Zealand Dollar (GBP/NZD) exchange rate is facing headwinds this morning as the Conservative Party begin another leadership race just 45 days after Liz Truss became Prime Minister.
At the time of writing the GBP/NZD exchange rate is trading around NZ$1.9748 which is roughly down 0.2% from this morning’s opening rate.
Pound (GBP) Slips as Tory’s Being Search for New PM
The Pound (GBP) is struggling to find much support this morning as a new leadership race begins in the wake of Liz Truss’s resignation as Prime Minister yesterday.
The came after over a dozen Tory MPs called for her resignation over the last week. Tensions seemed to boil over after a chaotic vote on fracking Wednesday night in the House of Commons and the surprise resignation of Home Secretary Suella Braverman.
Following such turbulence, the PM tended her resignation yesterday lunchtime, with the Pound ticking higher following the announcement
However, the uncertainty of another leadership race quickly erased Sterling’s post-resignation gains.
Also weighing on the Pound today is the release of the latest UK retail sales figures. Data shows that sales dropped to -1.4% in September from -1.7% in August. The poor figures demonstrate the strain the UK economy is facing under the cost-of-living crisis.
Ruth Gregory, senior UK economist at Capital Economics spoke about the situation, saying:
‘The weakness in retail sales and overshoot of the Office for Budget Responsibility’s March public borrowing forecast won’t make the next prime minister’s task any easier in navigating the economy through the cost of living crisis, cost of borrowing crisis and the cost of credibility crisis…’
New Zealand Dollar (NZD) Gains Tempered by Risk Aversion
The New Zealand Dollar (NZD) is currently up against the Pound, but down against almost all of its other peers as a risk-off mood prevails
Market sentiment is downbeat this morning hindered by political instability within the UK. Investors have previously raised concerns that the UK’s fiscal and political turmoil could ripple through developed markets.
Also triggering risk aversion is the continuous aggressive interest rate hikes from central banks, which is stocking global recession fears. As such the risk sensitive ‘Kiwi’ is facing some headwinds this morning.
Pound New Zealand Dollar Exchange Forecast: GBP to Sink More amid Leadership Race?
Looking ahead, movement in the Pound New Zealand exchange rate could continue to be driven by the political instability within the UK.
The lack of further data releases today will see GBP investors turn to UK political headlines. Boris Johnson, Rishi Sunak and Penny Mordaunt have attracted early backing within the leadership race. Any statements given by the three could inject more volatility into Sterling.
Turning to the New Zealand Dollar, the currency will likely continue to trade in line with risk appetite for the rest of the day. Any positive news abroad could help give the ‘Kiwi’ a boost.