February 20, 2019 - Written by John Cameron
STORY LINK Pound to New Zealand Dollar Exchange Rate Live: GBP/NZD Struggles Following Tory Resignations
The Pound New Zealand Dollar (GBP/NZD) exchange rate has fluctuated over the course of the session, with the pairing currently trading in the region of NZ$1.8960.
Today’s headlines have been full of the news that three members of Prime Minister Theresa May’s Party have resigned to join an independent group set up by former Labour MPs.
In a letter addressed to the PM, MPs Anna Soubry, Sarah Wollaston and Heidi Allen wrote:
‘We find it unconscionable that a party, once trusted on the economy, more than any other, is now recklessly marching the country to the cliff edge of no deal.’
Meanwhile over in New Zealand, data showed that the New Zealand Producer Price Index for Q4 2018 rose by a better-than-forecast 1.6%. While this was the highest quarterly rise since Q3 2015, the data had little impact on the New Zealand Dollar.
Earlier: New Zealand Dollar (NZD) Exchange Rates Fluctuate as NZ Dairy Prices Soar
Tuesday saw New Zealand dairy prices continue rising to the highest levels in eight months following a slow-down in milk supply globally.
Susan Kilsby, an Agriculture Economist at ANZ commenting on the data release said:
‘The growth rates out of Europe and the US are much more moderate than what we had seen previously, so that’s supportive to prices going forward.
‘Where the uncertainty really comes is more on the demand side, with the global economies not expected to perform quite as well as they have done throughout the rest of the year, so that will be an interesting one to watch […] how that balances out.’
The average price of dairy had increased by 0.9%, following the previous rise of 6.7% two weeks prior.
Trade Talks Support Sentiment, Brexit Drives Pound Sterling (GBP) Exchange Rates
It was reported on Tuesday that the US had asked China to promise to stabilise the Chinese Yuan, which saw the Yuan rise to a two-week high.
Further hope that tensions between the US and China were cooling was sparked by President Donald Trump telling reporters:
‘They are very complex talks. They’re going very well. I can’t tell you exactly about timing, but the date is not a magical date. A lot of things can happen.’
However, while improving risk appetite would be NZD
supportive, Brexit news is more likely to be the cause of GBP/NZD exchange rate volatility.
GBP/NZD Exchange Rate Outlook: Will Sterling Rise on Brexit Breakthrough?
Looking forward, it is likely that the Pound New Zealand (GBP/NZD) exchange rate will fluctuate following the meeting between Prime Minister Theresa May and European Commission President Jean-Claude Juncker.
It is expected that the discussion will focus on the Irish backstop, with May likely to request legally binding assurances the backstop will not be indefinite, although if this is rejected by the EU, it could see Pound sentiment dampened.
This evening will see the release of the US Federal Open Market Committee’s minutes, which could see the risk-sensitive New Zealand Dollar rise if there is indication that an interest rate hike remains unlikely this year.
Also likely to cause movement in the pairing is the continuation of US China trade discussions in Washington.
Further signs President Trump will push back the 1 March deadline, or signs of a significant breakthrough will likely see investors’ risk appetite increase, buoying the ‘Kiwi’.
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TAGS: Pound New Zealand Dollar Forecasts