Pound to New Zealand Dollar Exchange Rate Advances Ahead of Next Week’s Key UK Data
While persistent Brexit uncertainties have caused the Pound to New Zealand Dollar (GBP/NZD) exchange rate to fall from its best weekly levels, risk-aversion has still helped the pair to put in notable gains this week.
Following last week’s climb from 1.9264 to 1.9435, GBP/NZD briefly touched on a high of 1.9696 this week – the pair’s best level since April. At the time of writing on Friday, GBP/NZD had fallen from its best levels and trended nearer 1.9550.
The New Zealand Dollar (NZD) has been unappealing over the past week, as market demand for risky trade-correlated currencies has been limited by US-China trade jitters.
Optimism that the US and China could make a deal benefitted the Australian Dollar (AUD) more than the New Zealand Dollar. However, panic that a deal could fail to be made has still been weighing on NZD.
Essentially, GBP/NZD has been gaining due to some strength in Sterling (GBP) trade, as well as strength in the New Zealand Dollar’s rivals leaving the antipodean currency weak.
Pound (GBP) Exchange Rates Fail to Hold Best Levels as Brexit Uncertainties Persist
The Pound has been unable to hold its best levels this week, as despite speculation that the UK could remain in an EU customs union after Brexit, considerably uncertainty still remained.
The UK government has been hesitant to indicate that it will aim to keep the UK in an EU customs union following the Brexit process, despite reports claiming that this was the government’s plan.
On Thursday evening, fresh reports emerged indicating that the UK government cabinet had agreed to a customs proposal aimed at preventing a hard border in Ireland following Brexit.
It would see the UK and EU matching tariffs, and would work as a backup plan in the event that a preferred deal is not agreed.
Uncertainty remained however, as government sources have stated that the government is confident it can agree to a more bespoke customs deal before Britain fully leaves the EU.
This uncertainty caused GBP/NZD to fall from its best levels towards the end of the week, but the pair had still benefitted overall from customs union hopes and solid UK job data.
New Zealand Dollar (NZD) Exchange Rates Limited by Trade Fears
Concerns that the US and China will not be able to agree to a trade deal, or that tensions between the nations could still escalate to a trade war, have limited the New Zealand Dollar’s appeal to investors.
The New Zealand Dollar is a risky commodity-correlated currency, so it underperforms when global trade uncertainties worsen.
Due to the recent market focus on US trade protectionism, the New Zealand Dollar was unable to even benefit from this week’s news that prices of dairy, New Zealand’s most lucrative commodity, had risen.
Pound to New Zealand Dollar (GBP/NZD) Forecast: Major UK Ecostats in Focus
Could the Pound to New Zealand Dollar (GBP/NZD) exchange rate see a third consecutive week of gains? That depends on the strength of next week’s key UK ecostats.
The only New Zealand data due for publication next week will be April’s NZ trade balance results, which will be published during Thursday’s Asian session.
NZD movement will be mostly influenced by that trade data, as well as any notable global trade developments – such as talks between the US and China.
Besides that, Sterling is most likely to drive GBP/NZD as key UK inflation, retail and growth data will be published throughout the week.
Britain’s April inflation rate will be published on Wednesday and is expected to have improved following its unexpectedly sharp dip in March. If UK inflation improves from 2.5% to 2.7% year-on-year as forecast it could boost Sterling appeal.
UK retail sales will be published on Thursday and updated growth projections will come in on Friday.
With the New Zealand Dollar likely to remain under pressure from trade uncertainties, the Pound to New Zealand Dollar (GBP/NZD) exchange rate rally could continue if UK data beats expectations and bolsters UK economic hopes.
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