- UK currency rallies as vote week commences – ‘Remain’ camp bounces back in the polls
- Positive GBP exchange rate movements seen across the board – Volatility to increase as Thursday’s vote approaches
- New Zealand Dollar strong overall despite falling confidence – ‘Buck’ devaluation aids ‘Kiwi’ appreciation
- UK borrowing data due tomorrow – NZ migration stats out later on
The Pound has managed to make considerable gains against the New Zealand Dollar and every other major peer today, having been sent skywards by the latest EU Referendum polls.
The New Zealand Dollar has also been a strong contender in its exchange rate pairings, with gains being recorded against all but the more powerful Pound.
UK Economic News: Cameron Grilling Fails to Dent Appeal of Remain Campaign in the Polls
The most recent pieces of UK economic data, consisting of the mixed Rightmove house prices for June, have not had much of an impact on the Pound, at least in comparison to the latest EU Referendum news.
With campaigning being officially suspended last week in the wake of the appalling murder of Labour MP Jo Cox on Thursday, the ‘Remain’ camp, which is campaigning for what investors see as the stable referendum outcome for the UK economy has made a strong recovery.
Campaigning resumed yesterday with a televised Q&A session with Prime Minister David Cameron and, although the PM’s performance was greeted with a mixed reception, the polls have nonetheless put the ‘Remain’ campaign on a level pegging with their ‘Leave’ competitors in most cases.
In some particularly encouraging polls for investors, the ‘In’ vote has resumed its spot as the dominant of the two possible outcomes to the Referendum vote, further strengthening the favourable position of the Pound in the eyes of traders.
Movement for the Pound today has included gains of 1.2% against the New Zealand Dollar (GBP/NZD), 1.5% against the Euro (GBP/EUR), 2% against the US Dollar (GBP/USD) and over 2.3% against the Japanese Yen (GBP/JPY) and the Indian Rupee (GBP/INR). This strong showing against the ‘Kiwi’ is a repeat of last week’s movement.
New Zealand Dollar Strength Stems from Latest Deterioration in US Economic Confidence
The currently high appeal of the New Zealand Dollar is due to external influences; namely the spectacular dive taken in exchange rates by the US Dollar.
In this latter case, confidence in the US economy has dwindled due to recent forecasts from a number of economists that, in addition to harming the UK and the EU, a Brexit might also have a negative knock-on effect for the global economy, particularly the US.
Bluntly summarising the situation, Peterson Institute for International Economics Senior Fellow Jacob Kirkegaard said of recent predictions that:
‘They basically all say somewhat the same thing. Namely, that there is little doubt that the economics will be bad’.
In domestic news for New Zealand, the price of milk has fallen once again, as has the Q2 Westpac consumer confidence result. In an additional blow to New Zealand’s economic prospects, the nation’s performance of services index for May has fallen from 57.8 to 56.9.
‘Kiwi’ movements of late have included rises of 0.3% against the Australian Dollar (NZD/AUD) and 1% against the US Dollar (NZD/USD), although against the Pound (NZD/GBP) a decline of -0.9% has been seen.
Future GBP, NZD Forecast: UK Borrowing Data and NZ Migration Figures could have Muted Impact
With no notable UK economic announcements left today, it seems likely that the next major shift for the Pound could come tomorrow morning, when the national borrowing stats for May are due. As has been the case today, however, the results of the data – even a dramatic widening or reduction of the deficit – may not cause much movement if another sizeable shift has been seen in the faring of the two Referendum campaigns.
Much later on during the night, New Zealand will announce its net migration results for May.
Current GBP, NZD Exchange Rates
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending in the region of 2.0557 and the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate was trending in the region of 0.4870 today.
Comments are closed.