GBP/NZD Exchange Rate Rangebound, ‘Kiwi’ Fails to Benefit from Improving Global Dairy Prices
The Pound New Zealand Dollar (GBP/NZD) exchange rate held steady today, with the pairing currently trading around NZ$ 1.978 as geopolitical tensions between the US and Iran continue to hold back the risk-sensitive ‘Kiwi’.
The New Zealand Dollar (NZD) could, however, rebound as US-Iran tensions begin to show signs of fading after an Iranian airstrike on a US military base in Iraq failed to yield any casualties, providing Washington and Iran some room to avoid full-scale conflict in the Middle East.
Iran’s Foreign Minister Mohammad Javad Zarif also commented on Twitter:
‘We do not seek escalation or war, but will defend ourselves against any aggression’.
Meanwhile, yesterday’s boost in New Zealand’s Global Dairy Trade price index, which rose unexpectedly to 2.8%, failed to provide much of a boost for the New Zealand Dollar.
Robert Gibson, an Analyst at NZX, commented:
‘This was underpinned by price increases for all dairy commodities, with smaller overall supply volumes available compared with the previous event, which is typical for this time of year but is likely to have contributed to the uptick in demand.’
GBP/NZD Exchange Rate Steady despite Boost in UK Labour Productivity
The Pound (GBP) struggled to rise against the ‘Kiwi’ following today’s release of the UK labour productivity figure in the third quarter, which rose to 3.6% ending its decade-long stagnation.
Katherine Kent, Head of Productivity at the Office for National Statistics (ONS), commented:
‘Although productivity grew on the year, the underlying picture is of sustained weakness since 2008, with growth over the past year being only a third of the average over the past 10 years or so.’
Brexit developments continue to dominate UK market attention today, with Sterling traders feeling jittery after the President of the European Commission, Ursula van der Layen, said that it was “impossible” for the UK to secure a full Brexit deal with the EU due to Prime Minister Boris Johnson’s insistence on a late December 2020 termination to the transition period.
Mrs Layen commented:
‘The more divergence there is the more distant the partnership has to be. Without an extension of the transition period beyond 2020, you cannot expect to agree on every single aspect of our new partnership.’
GBP/NZD Outlook: Could a Brexit Breakthrough Boost the Pound?
New Zealand Dollar investors will be awaiting tomorrow’s release of December’s ANZ commodity price figure, which is expected to rise by 3%.
US-China trade developments will continue to drive the New Zealand Dollar this week, with Beijing and Washington due to sing off the Phase One trade deal on the 15th January. However, if talks are delayed, or relations continue to sour between the two superpowers, we could see the NZD/GBP exchange rate fall.
Brexit will continue to remain in focus for Pound traders, with any signs of a frictionless January 31st UK withdrawal from the European Union providing a boost to Sterling as a clearer path ahead emerges for British businesses.
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