Pound New Zealand Dollar (GBP/NZD) Exchange Rate Steadies as US-China Trade Doubts Return
July 2, 2019 - Written by John Cameron
STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Steadies as US-China Trade Doubts Return
GBP/NZD Exchange Rate Flat as ‘Kiwi’ Traders Await Global Dairy Trade Figures
The Pound New Zealand Dollar (GBP/NZD) exchange rate steadied today and is currently trading around NZ$1.895 on the interbank market.
The New Zealand Dollar (NZD) stabilised against the Pound (GBP) following yesterday’s publication of the NZIER business confidence figures for the second-quarter, which plummeted by -34%.
Jane Turner, a Senior Economist at ASB, commented:
‘There is evidence to suggest that falling profit margins are now impacting employment demand, and the risk is that a weaker labour market may result in the economic slowdown becoming more entrenched.’
Doubts have also begun to arise surrounding the US-China trade ‘truce’, with Rick Scott, the Republican Senator for Florida, saying that he doesn’t believe there will be a deal emerging between the two superpowers.
With the ‘Kiwi’ being so sensitive to developments regarding trade between the US and China – due to being one of China’s closest trading partners – this has caused NZ markets to become more cautious.
New Zealand Dollar traders will be awaiting today’s publication of the Global Dairy Trade price index figures, and with any signs of improvement, we could begin to see the NZD/GBP exchange rate rise.
GBP/NZD Exchange Rate Steadies despite Falling UK Construction Figures
The Pound, meanwhile, failed make any gains on the ‘Kiwi’ following the UK construction PMI figures for June, which fell deeper into contraction from 48.6 to 43.1.
Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, said:
‘The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news… [And] with the onslaught of indecision combined with a weakening global economy, this could easily turn into more months of contraction as future optimism remains subdued.’
No-deal Brexit fears have increased today as both Tory leadership candidates – Boris Johnson and Foreign Secretary Jeremy Hunt – are showing increasing resilience on the issue of a possible chaotic exit from the European Union.
Mr Johnson has even gone so far as to defend a no-deal, saying that fears had been ‘wildly over-done’.
These came after the Chancellor of the Exchequer, Philip Hammond, warned of a £90bn cost for the UK should a no-deal become a reality.
Sterling traders, as a result, have become increasingly jittery.
GBP/NZD Outlook: UK Services PMI Figures in Focus
Pound traders will be awaiting tomorrow’s publication of the UK Markit Services PMI figures for June, which are expected to hold steady at 51.
Tomorrow will also see a speech from the Bank of England’s Dr Ben Broadbent, a member of the Monetary Policy Committee, and with any dovish comments about the UK economy we could begin to see the GBP/NZD exchange rate begin to fall.
New Zealand Dollar investors, meanwhile, will be paying close attention to any signs of a trade deal emerging between the US and China.
Should there be any progress between the two superpowers, the risk-correlated ‘Kiwi’ would rise on returning risk-appetite.
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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts
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