Sterling has found support against the NZD of late, despite a downturn against the majority of major currencies.
GBP/NZD rates hit a high of 1.9186 overnight, with the Pound finding plenty of support above 1.90.
This is likely due to the political changes in New Zealand, where Labour leader and new Prime Minister Jacinda Ardern has taken power. This came at the expense of previous PM Bill English, who was the most a popular leader, who actually acquired more of the public votes than Ardern.
However, due to the political system in New Zealand he did not acquire enough of the percentage to form a majority and it was ultimately the Populist Winston Peters, who helped Ardern gain power by forming a coalition government.
Due to their policies, and some would say even radical stances on a majority of issues, investors have shied away from the NZD, which has ultimately boosted Sterling’s position.
The upturn for the Pound is somewhat fabricated due to this lack of confidence in the NZD and as such, the Pound remains fragile in my opinion.
This becomes even more apparent when you consider how much pressure Sterling is against the majority of major currencies at present, with the political unrest and stagnating Brexit negotiations dragging the Pound’s value down.
The UK economy is under a huge amount of pressure and despite the Bank of England (BoE) raising interest rates my a marginal 0.25%, there has been no real change in market perception.
For this reason I would be very tempted to take advantage of the current highs, which would not be available had the political situation in New Zealand been more stable.
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