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GBP to NZD Exchange Rate Fails to Recover on Election Hopes as ‘Kiwi’ Holds Ground

November 14, 2019 - Written by James Fuller

UK election hopes boosting demand for the British Pound to New Zealand Dollar (GBP/NZD) exchange rate hasn’t been enough to help the pair to recover from yesterday’s slump, as the latest Reserve Bank of New Zealand (RBNZ) news has continued to support the New Zealand Dollar’s gains. The Pound’s potential for gains has also been limited amid a week of poor UK ecostats, but trade news has not been enough to knock the New Zealand Dollar.

After opening this week at the level of 2.0185, GBP/NZD trended with an upside bias, briefly touching on a three week high of 2.0319 earlier in the week before plunging yesterday.

The November Reserve Bank of New Zealand decision was a bullish surprise for markets, leading to a GBP/NZD plunge. GBP/NZD touched on a weekly low of 2.0025 yesterday, and while the pair has been trending a little higher today its gains have been limited and the pair is still trending low at the level of 2.0065 at the time of writing.

GBP Exchange Rates Sturdy on Hopes for Softer Brexit Outcome to UK Election


Despite a week of poor UK ecostats, the Pound has seen steady movement throughout the week so far.

Investors are hesitant to move much on the British currency, amid persisting hopes that next month’s UK General Election will end with a majority for the ruling Conservative Party.

Analysts are speculating that this will help the Tories to push through relatively soft Brexit plans and avoid a no-deal Brexit. This is keeping the Pound buoyed.

According to Luca Paolini, Chief Strategist at Pictet Asset Management:

‘if you look at the polls and everything, it seems to me that it’s more likely than not that the election will result in a Conservative majority and if that’s the case, I suspect that Brexit will completely come off the headlines,

There will be some sort of soft Brexit, one way or another, and investors will move on.’


These hopes helped the Pound to avoid further losses today, even as Britain’s latest retail sales results fell short of forecasts.

UK retail sales were expected to rise 0.2% month-on-month, but unexpectedly contracted at -0.1%. Yearly retail sales slowed to just 3.1%.

NZD Exchange Rates Remain Strong Following RBNZ’s Shock November Decision


Yesterday’s news that the Reserve Bank of New Zealand (RBNZ) had defied expectations and opted not to cut New Zealand’s interest rates left the New Zealand Dollar surging, and the currency is holding its ground today.

RBNZ interest rate cut bets were pushed back when the bank shocked with its decision to leave monetary policy frozen. The bank said it did not yet consider another rate cut necessary.

While markets still expect an easing bias from the RBNZ, this news has kept the New Zealand Dollar appealing, especially against rivals like the Australian Dollar (AUD) and US Dollar (USD).

Demand for the New Zealand Dollar was weighed slightly by today’s news that Australia’s job market had unexpectedly weakened, boosting Reserve Bank of Australia (RBA) interest rate cut bets.

Fresh uncertainty in US-China trade relations also dampened demand for the trade-correlated ‘Kiwi’.

Ultimately though, these factors were not enough to keep the New Zealand Dollar weak following the surprisingly hawkish RBNZ news.

GBP/NZD Exchange Rate Forecast: New Zealand Business PMI Ahead


Most of this week’s most notable UK and New Zealand data has been published already, and the data ultimately had little impact on the election-focused Pound.

With Pound investors likely to remain focused on developments in UK election and political news, GBP/NZD will continue to be driven by New Zealand Dollar shifts in the coming sessions instead.

New Zealand’s October business PMI will be published during Friday’s Asian session and could cause some NZD movement if it surprises investors.

However, it’s more likely that US-China trade developments and central bank speculation will remain the focus for New Zealand Dollar investors and the Pound to New Zealand Dollar exchange rate.
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