GBP/NZD rates have remained flat throughout Wednesday’s trading, with the Pound touching 1.93 earlier at its high.
The NZD has received plenty of support around the current levels of late, with Sterling struggling to make any inroads above 1.95.
The New Zealand economy has shown signs of life of late, after stagnating for the first two quarters of 2018. This positive outlook was accentuated overnight, following the release of the latest Retail Sales figures for New Zealand. These came out significantly better than expected at 1.1%, with the prediction being for growth of 0.4%.
This has increased speculation that Gross Domestic Product (GDP) growth for Q2 could exceed the expected figure of 0.5%. If this does occur I would expect the NZD to find further support and with so much uncertainty surrounding the UK economy and the current breakdown in Brexit talks, could we potentially see a move back to 1.90?
The answer to this could be linked to any further slowdowns in global trade. Like all commodity-based currencies, New Zealand’s economy is heavily reliant on a strong global market. Any continued slowdown in global trade could put pressure on the NZD and any major upturns from the current levels will prove harder to come by.
We also need to consider President Trump’s trade tariffs on China and the negative effect that these have had on Chinese economic growth of late. With New Zealand’s economic well-being inextricably linked to that of China & Australia, its two largest trade partners, any further stagnation could also put pressure on the New Zealand economy moving forward.
For the time being the markets seem to be viewing this as the lesser of two evils, when comparing it to concerns over Brexits potential impact on the UK economy. However, any forward momentum in talks could alleviate some pressure and for that reason I would be tempted to take advantage of the recent improvement, if I was looking to sell NZD in the short-term. If you’d like any further information on the above factors and how they could impact your New Zealand Dollar exchange, feel free to get in touch with me directly using firstname.lastname@example.org.