Pound New Zealand Dollar (GBP/NZD) Exchange Rate at Six-Month High on UK Election Speculation

December 5, 2019 – Written by Frank Davies

Stronger Conservative Polls Boost Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate

With the Conservatives continuing to perform well in the polls the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate climbed to its highest level since May.

While it remains to be seen whether these polling figures will ultimately translate into a parliamentary majority this did not stop investors from piling into the Pound.

The apparently reduced risk of a hung parliament helped GBP exchange rates push to fresh highs across the board, even as domestic data continued to paint an underwhelming picture.

Lingering market anxiety over global trade, meanwhile, kept the risk-sensitive New Zealand Dollar on the back foot.

UK House Price Index Contraction May Dent GBP/NZD Exchange Rate

Friday’s Halifax house price index could put a dampener on GBP exchange rates, with forecasts pointing towards a sharp -0.7% contraction on the month.

Evidence that the UK housing market is continuing to slow in the face of economic and political anxiety would likely undermine confidence in the wider outlook of the economy.

Even so, a weak showing here may not be enough to weigh the Pound down as long as markets maintain their current sense of election optimism.

Unless the Conservative lead shows signs of diminishing the GBP/NZD exchange rate is likely to remain supported by bets of a Conservative majority.

US Trade Worries Expected to Limit New Zealand Dollar Potential

In the absence of any fresh New Zealand data, on the other hand, the New Zealand Dollar may struggle to find any particular footing against its rivals.

Stronger signals from the US economy may drive investors to sell out of the risk-sensitive NZD in the near term, especially if worries over the global trade outlook persist.

However, positive comments from US and Chinese officials on the subject of trade could see NZD exchange rates rallying sharply.

As long as markets see reason to bet that the two sides could still reach a phase one trade agreement before the end of the year this is likely to improve the appeal of the New Zealand Dollar.

Political Speculation Set to Dominate GBP/NZD Exchange Rate Direction

Looking ahead to next week, GBP exchange rates look set to experience renewed volatility as Thursday’s general election draws closer.

Even if investors remain generally confident in the outcome of the vote this is unlikely to be enough to prevent the Pound from coming under pressure.

As the polls have proved misleading in other recent votes GBP exchange rates are likely to remain jittery ahead of the actual result.

With focus trained firmly on the election the impact of any fresh UK data may prove minimal in the days ahead.

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TAGS: Pound New Zealand Dollar Forecasts