July 25, 2019 - Written by John Cameron
STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as US-China Trade Tensions Return
GBP/NZD Exchange Rate Edges Higher as Dovish RBA Fails to Uplift ‘Kiwi’
The Pound New Zealand Dollar (GBP/NZD) exchange rated edged higher today, leaving the pairing trading around NZ$1.8679.
The New Zealand Dollar (NZD) fell against Sterling (GBP) failed to benefit from comments from the Reserve Bank of Australia Governor Philip Lowe, who said that he’d be prepared to ease monetary policy if required.
Mr Lowe said:
‘If demand growth is not sufficient, the board is prepared to provide additional support by easing monetary policy further.’
Increasing concerns over US-China trade tensions are holding back the ‘Kiwi’, however, following yesterday’s reports of a US warship sailing through the Taiwan Strait.
Hua Chunying, the spokeswoman for China, said:
‘The Taiwan question is the most sensitive and important issue between China and the U.S. We urge … to be prudent and act appropriately with regards to Taiwan so that it doesn’t harm China-U.S. relations and the peace and stability in the Taiwan Strait’s region.’
As New Zealand’s economy is reliant on calm relations between the US and China, this has caused markets to become weary of trading in NZD.
GBP/NZD Exchange Rate Rises as Boris Johnson Remains in Focus
The Pound (GBP) meanwhile has fluctuated today as UK markets absorb the news that Boris Johnson has now become the UK’s new Prime Minister.
Following yesterday’s announcement of his new cabinet – which sacked over half of Theresa May’s previous team – Sterling traders have become increasingly jittery over the heightened possibility of a no-deal Brexit.
Mr Johnson’s cabinet now consists of a majority of Brexiters, and following his comments that the UK would leave the EU on October ‘no ifs, no buts’, no-deal fears are increasing.
Former Tory MP Nick Boles said:
‘The hard right has taken over the Conservative Party. Thatcherites, libertarians and No Deal Brexiters control it top to bottom. Liberal One Nation Conservatives have been ruthlessly culled. Only a few neutered captives are being kept on as window dressing.’
Today also saw the publication of the CBI Distributive Trades Survey for July, which fell to a worse-than-expected -16%, holding back some of GBP’s gains.
GBP/NZD Outlook: Could Sterling Rise on New Brexit Developments?
Sterling traders will be focusing on Brexit developments and Boris Johnson towards the end of this week.
However, some analysts have speculated that the GBP/NZD could rise on a ‘honeymoon’ period in which Brexit debates once again heat up under Boris Johnson’s new cabinet.
The GBP/NZD exchange, therefore, could begin to edge higher towards the end of this week as political developments are likely to rapidly unfold now that the UK has a new Prime Minister.
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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts