The Pound New Zealand Dollar exchange rate has climbed during trading today, though turbulence could still remain for the Pound on the precise details of Brexit.
The New Zealand Dollar’s losses have come from fears about future trade, which have been sparked by US President Donald Trump.
Pound Demand Rises along with GDP Growth; Services Sector still Carries UK Economy
The Pound has seen a 0.3% rise against the New Zealand Dollar today, following the announcement that preliminary UK GDP growth rates in Q4 have not slowed.
While this news has been positive, the fact that the figures did not print higher than previously has limited the positive impact, as have statistics showing that the UK is still extremely reliant on the services sector to keep its economy afloat.
For New Zealand, the latest good news has been that inflation rose in Q4 on both the quarter and the year.
However, wider concerns about whether the nation will keep a multinational trade deal intact have dominated investor focus on New Zealand recently and seen the NZD slip against the Pound.
GBP NZD Exchange Rate Demand Tied to MP Actions on Article 50 Bill
Looking ahead, one of the major destabilisers for the Pound New Zealand Dollar exchange rate could be just how MPs act on the Article 50 bill, which will allow the Government to officially start the UK’s exit from the EU once passed.
Talk has been abundant about adding amendments to the bill in an effort to smooth the UK-EU split instead of wrenching the two entities apart, but it remains to be seen whether such amendments will make it into practice due to divisions within the House of Commons on the contentious issue.
The Pound could well rally if ‘stabilising’ amendments are put in place, such as ensuring that some kind of UK-EU trade deal is agreed instead of taking a ‘no deal over a bad deal’ approach.
New Zealand Dollar Stability Dependent on Salvaged TPP Trade Deal
Asides from factors such as milk prices, one of the biggest influencers on the New Zealand Dollar in the future is likely to be the outcome of current negotiation on the Trans-Pacific Partnership (TPP).
The TPP deal was signed by member nations (including Australia, Japan, New Zealand and the US) in early 2016, though since then President Trump has withdrawn the US from the deal.
This has left the future of TPP hanging by a thread; Japan has been trying to bring the US back into the fold while other nations have been musing the inclusion of China and Indonesia to fill the US’s place.
If talks are seen to be progressing smoothly, then the New Zealand Dollar may well appreciate on such news, but if TPP members start to get cold feet, then NZD demand could plummet due to years of difficult trade talks going down the drain with nothing to show for it.
Recent Interbank GBP NZD Exchange Rates
At the time of writing, the Pound New Zealand Dollar (GBP NZD) exchange rate was trending in the region of 1.73 and the New Zealand Dollar Pound (NZD GBP) exchange rate was trending in the region of 0.57.
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