Pound New Zealand Dollar (GPB/NZD) Exchange Rate Steady, BoE Hints at Rate Cut

September 27, 2019 - Written by John Cameron

STORY LINK Pound New Zealand Dollar (GPB/NZD) Exchange Rate Steady, BoE Hints at Rate Cut

GBP/NZD Exchange Rate Rangebound as BoE Rate Cut Fears Return

The Pound New Zealand Dollar (GBP/NZD) exchange rate held steady at around NZ$1.957 today after the Bank of England (BoE) hinted at a Brexit interest rate cut. This follows the BoE’s policymaker Michael Saunders suggestion that the central bank could slash interest rates soon due to Brexit uncertainty.

Mr Saunders commented:

‘If the UK avoids a no-deal Brexit, monetary policy also could go either way and I think it is quite plausible that the next move in Bank Rate would be down rather than up.’

As a result, the UK’s ongoing political uncertainty surrounding Brexit is continuing to weigh on sentiment in the Pound.

Today also saw the release of September’s UK GfK consumer confidence index, which beat expectations and rose from -14 to -12. However, this was not enough to boost Sterling.

Joe Staton, Client Strategy Director at GfK, said:

‘Yes, all sub measures are higher, but they are anaemic in the case of our purchase intentions and how we view our wallets, while the results on the wider economy are still depressed. Since the Brexit referendum we have witnessed a long succession of negative Overall Index scores with the overall trend downwards.’

NZD/GBP Exchange Rate Flat, RBNZ Rate Cut Fears Increase

The New Zealand Dollar (NZD) failed to gain on Sterling today as fears that the Reserve Bank of Australia cutting interests rates in November have risen, dampening confidence in the risk-sensitive ‘Kiwi’.

Imre Speizer, Currency Strategist at financial services company Westpac, commented:

‘Globally, we haven't had anything worse and the data hasn't gotten any worse and in fact it has stabilised in some cases. The focus in the very short term for kiwi markets is `are we going to get a cut in November? We think they will cut but I wouldn't say it's all but certain.’

NZD’s losses were however buffered by improving risk sentiment as US-China trade tensions ease, with talks set to resume between the two superpowers on October 10. The US have also granted tariff exemptions on hundreds of Chinese products.

As a result, this has benefited the NZD, with the New Zealand economy being particularly sensitive to tensions between the two of the world’s largest economies, due to China being New Zealand’s largest trading partner.

GBP/NZD Outlook: Sterling Could Improve on Rising Q2 Growth Figure

Sterling could improve next week if the UK’s growth figure for the second quarter confirms consensus and rises from -0.2% to 0.5%.

Meanwhile, ‘Kiwi’ traders will be looking ahead to Monday’s release of Q3’s NZIER business confidence. Any signs of improvement could uplift the NZD/GBP exchange rate.

With global economic developments remaining in focus, however, the New Zealand Dollar is more likely to be driven by US-China trade developments.

The GBP/NZD exchange rate could improve however if the Conservative Government is challenged in the newly reopened Parliament on its hard-Brexit stance.

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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts