Pound to new zealand dollar exchange rate forecast to continue path on renewed brexit anxiety _ exchange rates uk

The mood towards the Pound Sterling improved on Thursday, encouraged by a better-than-expected RICS house price index and the prospect of the government revealing some of its Brexit plan to Parliament.

Although other recent UK data has pointed towards weakness within the UK economy the Pound has trended higher against many of its rivals, with jitters on the last day of the Supreme Court hearing minimal.

Concerns about the UK’s economic activity going forward were ignited by the morning’s industrial and manufacturing production results for October.


Meanwhile, the New Zealand Dollar benefitted from higher expectations for commodity trade and anticipation for China’s upcoming inflation report.

Confidence in the New Zealand Dollar picked up as the initial shock of Prime Minister Key’s resignation faded, prompting the GBP NZD exchange rate to cede further ground.

A heavy round of Pound Sterling selling occurred on Wednesday in response to some particularly disappointing UK industrial and manufacturing production data, which unexpectedly contracted.

With the higher-yielding New Zealand Dollar also benefiting from the weakness of its antipodean cousin the GBP NZD exchange rate trended sharply lower.

After edging higher for most of the day, Sterling was sold off slightly on Tuesday afternoon as traders grew anxious towards the week’s Supreme Court appeal once again.

The New Zealand Dollar’s strength remained low even after the day’s Global Dairy Trade (GDT) auction revealed that dairy prices had edged higher once again.

A mood of political uncertainty has continued hampering the New Zealand Dollar, while the Pound has been boosted by the latest developments in the ongoing Brexit saga.

With investors still unsettled by the sudden resignation of New Zealand Prime Minister John Key, the Pound Sterling New Zealand Dollar (GBP NZD) exchange rate has remained on a stronger footing.

Confidence in the New Zealand Dollar was not boosted by another uptick of 3.5% in the GlobalDairyTrade price index, with investors appearing a little disappointed that the rate of gains has continued to moderate.

As market risk appetite has remained muted, thanks to increased bets that the Federal Reserve will raise interest rates imminently, the commodity-correlated ‘Kiwi’ seems unlikely to return to a stronger footing in the near term.

The underlying fundamentals of the New Zealand economy appear to remain generally solid, as indicated by November’s ANZ heavy traffic index, which rose 4% on the month.

‘It is notable that the Heavy Traffic Index is trucking along, albeit with volatility, but the upward trend in the Light Traffic Index, which leads the economy by six months, has flattened out. Td bank interest rates savings account Firms report that the availability of labour is restraining growth, and credit is also becoming a constraint. Interest rates on icici bank fixed deposits Given the economy’s speed limits, it would not be at all surprising or concerning to see growth moderate over the next six months.’

Should this trend of positive domestic data continue then market pricing for another Reserve Bank of New Zealand (RBNZ) interest rate cut is likely to remain minimal, limiting the upside potential of the GBP NZD exchange rate.

Demand for the Pound, on the other hand, has been generally boosted by fresh speculation that the UK could pay to maintain its current level of access to the EU single market.

This naturally prompted investors to bet on the odds of a softer form of Brexit taking place, even as the Supreme Court continues hearing the government’s appeal against greater Parliamentary involvement in the exit process.

As the eventual outcome of Brexit negotiations is far from clear, however, the GBP NZD exchange rate may struggle to maintain a stronger footing as uncertainty continues dominating the outlook of the UK economy.

Wednesday’s UK industrial and manufacturing production figures could offer further encouragement to the Pound, with forecasts pointing towards a modest uptick in output on the year.

Even if this data proves bullish, though, the GBP NZD exchange rate could return to a downtrend in response to the NIESR Gross Domestic Product estimate for the three months to November.

Should the latest growth estimate suggest that domestic momentum is slowing then investors are likely to sell out of the Pound once again, even if Brexit-based anxiety remains muted.

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