Pound New Zealand Dollar (GBP/NZD) Exchange Rate Plummets as US-China Trade Tensions Ease

September 6, 2019 - Written by John Cameron

STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Plummets as US-China Trade Tensions Ease

GBP/NZD Exchange Rate Falls as ‘Kiwi’ Benefits from Renewed Risk Appetite

The Pound New Zealand Dollar (GBP/NZD) exchange rate fell by -0.8% today, with the pairing fluctuating around NZ$1.918 following renewed US-China trade optimism as the two superpowers agree to talks in October.

The New Zealand Dollar benefited as relations between the two nations has bolstered risk-appetite for the risk-averse ‘Kiwi’.

Raffi Boyadjian, a Senior Analyst at XM, commented:

‘Although investors have become increasingly doubtful about President Trump's commitment to reaching a trade deal with China, any sign of even a temporary de-escalation is welcome by the markets in a deteriorating global economic environment.’

With a quiet economic calendar for New Zealand until next week, ‘Kiwi’ traders will be focusing on global political developments into the weekend. Any further indications of easing tensions between the US and China would also further benefit the New Zealand currency.

GBP/NZD Exchange Rate Sinks as House of Lords Assents Lawful Parliament Prorogation

The Pound (GBP) plummeted against the New Zealand Dollar despite improving Halifax house prices figures for August. These rose above forecast at 0.3%.

Russell Galley, a Director at Halifax, commented:

‘While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong.’

However, UK political developments remain in focus today, with the British high court’s ruling Prime Minister Boris Johnson’s prorogation of Parliament lawful. This has further exacerbated tensions over Brexit, and has left MPs with less time to debate a deal ahead of the October 31 deadline.

Sterling traders are optimistic that the House of Lords will pass the anti no-deal Brexit bill today, which should effectively shelve a no-deal and buoy market optimism over a likely extension of the Brexit date.

GBP/NZD Outlook: Sterling Could Rise if No-Deal Brexit is Successfully Shelved

Pound investors will be looking ahead to Monday’s Parliamentary vote on Brexit which determines if Boris Johnson’s current Brexit plan is valid. If parliament fails to approve the Conservative Government’s plan, we could see Sterling fall on the increasing likelihood of a hard Brexit.

New Zealand Dollar traders, meanwhile, will be awaiting Monday’s publication of the NZ Electronic Card Retail Sales figure for August.

The ‘Kiwi’ could also further benefit from improving US-China trade relations.

The GBP/NZD exchange rate could edge higher next week if a no-deal Brexit is effectively shelved by legislation.

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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts