GBP NZD Exchange Rate Nosedives as Conservative Poll lead Narrows

May 26, 2017 - Written by John Cameron

STORY LINK GBP NZD Exchange Rate Nosedives as Conservative Poll lead Narrows

The Pound New Zealand Dollar (GBP NZD) exchange rate plummeted over a cent in early trading today as the Conservatives lead narrow in polls again.

According to the most recent YouGov poll Labour is now only 5 points behind the Conservatives, greatly narrowing the 24 point lead the Tories enjoyed at the start of the race.

This is an even smaller gap between the two parties in the 2015 general election, which saw most analysts predict would lead to a hung parliament and has cast doubt over the outcome of June’s election, which was widely forecast to be a Tory landslide just a few weeks ago.

The turnaround appears has mainly been attributed to the release of the Conservative manifesto last week which alienated a large number over voters over a proposed ‘dementia tax’, although the recent terror attack in Manchester and poor GDP figures may also have played a role.

The polls have cast further uncertainty over the Brexit process as markets had assumed that a landslide victory would help to provide Theresa May a mandate as she entered into negotiations with the EU and strengthen the government’s position.

Chris Turner, head of currency strategy at ING, said;

‘Pound longs were built on the basis of an anticipated large Conservative majority and a lower probability of a cliff-edge Brexit, the rationale is now being questioned ahead of the June 8 vote.’

The drop in the Pound also prevented the New Zealand Dollar from posting losses today despite a broad based fall in commodity-correlated currencies following the decline in oil markets yesterday.

Commodity prices weakened yesterday following a meeting by OPEC in which the oil cartel agreed to extend its current production cuts past the end of the year.

Markets were disappointed however that the group did not agree to implement harsher cuts after analysts suggested that that more needed to be done to tackle the global surplus.

Looking ahead the GBP NZD exchange rate is likely to stumble at the start of next week as the UK markets close for the bank holiday weekend, prompting thin trading volumes in the Pound.

Sterling is also likely to be softened by the release of the UK’s latest Consumer Confidence report, with analysts predicting that the increasing pressures of rising inflation and weak wage growth are likely to cause household sentiment to drop.

Meanwhile the New Zealand Dollar’s movement in the first half of next week’s session is likely to be driven by the tone of the Reserve Bank of New Zealand’s (RBNZ) latest Financial Stability Report when it is published on Tuesday, with a hawkish outlook likely to cause the ‘Kiwi’ to strengthen.

Current Interbank Exchange Rates

At the time of writing the GBP NZD exchange rate was trending around 1.8139 and the NZD GBP exchange rate was trending around 0.5511.

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TAGS: Daily Currency Updates New Zealand Dollar Forecasts