Pound New Zealand Dollar (GBP/NZD) Exchange Rate Steadies as May Gives the Go Ahead for Tomorrow?s Vote

March 11, 2019 - Written by John Cameron

STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Steadies as May Gives the Go Ahead for Tomorrow?s Vote

GBP/NZD Exchange Rate Rangebound as May Heads to Strasbourg

The Pound New Zealand (GBP/NZD) exchange rate steadied today and is currently trading around NZ$1.9076 on the inter-bank market.

Sterling (GBP) held steady against the New Zealand Dollar (NZD) today following Prime Minister Theresa May’s announcement that the ‘meaningful vote’ will go ahead tomorrow.

The Pound has benefited from reports that May is likely to return to Strasbourg today to engage in discussions with the president of the European Commission, Jean-Claude Juncker. This has buoyed hopes that the UK-EU political deadlock over the Irish backstop may break before tomorrow’s decisive vote.

Meanwhile, Boris Johnson, the former Cabinet Minister, said that there is simply ‘no way’ that he would vote for the Irish backstop in its present form.

Johnson further condemned Theresa May’s deal, saying:

‘The UK will have less sovereign power to withdraw from the backstop than it has to leave the EU itself. It is quite a bewildering state of affairs.’

The New Zealand Dollar is rangebound against Sterling today following the publication of New Zealand’s electronic card retail sales figures for February last night, which beat forecasts by rising to 0.9%.

Sue Chapman, a Retail Statistics Manager at Stats NZ, commented:

‘The rise in card spending was driven by people spending more on groceries and liquor… The rise in fuel spending coincided with a gradual increase in fuel prices, after a period of lower fuel prices.’

NZD/GBP Exchange Rate Flat as Chinese Exports Surge

Yesterday, however, saw the publication of the Chinese new loans figures for February, which fell below consensus to 885.8bn.

Today saw the publication of the Chinese vehicle sales figures for February which fell to -13.8%.

The New Zealand economy is closely tied to its largest trading partner, China, and with the continuing slowing down of the Chinese economy this is leaving some ‘Kiwi’ traders feeling nervous.

NZD, however, has benefited from the advance release of Chinese trade data which has showed a surge of 39.9% in Chinese exports.

Allan von Mehren, a China economist at Danske Bank, commented:

‘Positive news on exports could help shore up confidence a bit and thus stabilise the economy and help drive a moderate recovery… I do think [the advance March data announcement] may be because of the overall concern over the economy and negative sentiment that is pervasive among households and companies.’

GBP/NZD Forecast: Sterling Could Rise if May’s Deal Gains Backing

‘Kiwi’ traders will be awaiting the release of the Chinese FDI Foreign Direct Investment figures for February tomorrow, and with any improvement this could see the NZD/GBP exchange rate rise.

GBP investors, meanwhile, will be awaiting the publication of the UK manufacturing production figures for January tomorrow, which are expected to improve.

These will be followed by the release of the UK’s GDP figures for January, which are too expected to increase, likely benefiting the Pound.

The GBP/NZD exchange rate will however be dictated by the outcome of tomorrow’s ‘meaningful vote’. Any signs of improvement to the UK and EU situation regarding the Irish backstop would benefit the Pound, as May’s deal would gain more backing as a result.

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