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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Fears of RBNZ Rate Cuts Haunt NZ Markets

April 4, 2019 - Written by John Cameron

GBP/NZD Exchange Rate Increases as US-China Trade Talks Struggle on Tariffs

The Pound New Zealand Dollar (GBP/NZD) exchange rate is up today and is currently trading around NZ$1.9447.

Reports that New Zealand’s central bank could cut its interest rates next month has weighed on the ‘Kiwi’ today.

Dominick Stephens, an Economist at Westpac, commented:

‘We expect the RBNZ will cut the OCR to 1.50% in May 2019… There is a risk of a follow-up cut, but we think the RBNZ is more likely to hold off for the remainder of 2019.’

China, being one of New Zealand’s closest trading partners, is currently in its final stages of trade talks with the US, giving some ‘Kiwi’ traders reason for hope.

However, reports that US President Donald Trump has effectively stalled talks today over tariff complications.

Stephen Innes, the Head of Trading and Market Strategy at SPI Asset Management, summarised the situation, saying:

‘Arguably China-US trade dispute is the strongest headwind for the markets to tack, so this trade agreement should continue to provide a substantial boost to investor sentiment 'if' both sides can agree on the final pieces of this intricate puzzle.’

GBP/NZD Exchange Rate Rises as No-Deal Fears Return

The Pound, meanwhile, has generally struggled against other competitors today as concerns are increasing over the possibility of a no-deal Brexit, despite last night’s vote which saw a bill which effectively rules out a no-deal won by a mere single vote.

However, due to the deal being formed between both the UK and the EU, it is crucial that Prime Minister Theresa May’s Brexit deal must pass through parliament, following the President of the European Commission, Jean-Claude Juncker’s reluctance to delay Article 50 if the deal fails.

Juncker said:

‘If it has not done so by then, no further short extension will be possible. After 12 April, we risk jeopardising the European parliament elections, and so threaten the functioning of the European Union.’

Sterling traders, however, are focusing on cross-party talks with Theresa May and the Labour leader, Jeremy Corbyn, attempting to break the Brexit deadlock by forming a deal that would succeed through Parliament.

GBP/NZD Forecast: Sterling Could Rise on Brexit Consenus

Pound traders will be looking ahead to tomorrow’s publication of the UK Halifax house prices figures for March, and any increase could prove beneficial for GBP.

China, meanwhile, will be celebrating its bank holiday for the Ching Ming Festival, and with an absence of New Zealand economic data until next week, many ‘Kiwi’ traders will be keeping a close eye on global political developments, as well as the US-China trade talks.

The GBP/NZD exchange rate will remain sensitive to Brexit developments into next week, and with any indications that Theresa May can secure a majority of Parliament behind her Brexit deal ahead of 12 April, this could see the Pound soar.

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