The Pound-New Zealand Dollar rate could remain near 11-year highs if election uncertainty weighs on the Kiwi, while stronger NZ jobs data may offer some relief.
The Pound New Zealand Dollar (GBP/NZD) exchange rate touched a fresh 11-year high on Monday amid uncertainty ahead of New Zealand’s general election.
At the time of writing, GBP/NZD traded at NZ$2.3849, having eased off its high of NZ$2.3874 but still up 0.3% on the day.
Pound to New Zealand Dollar (GBP/NZD): 2.383643 (+0.23%)
Euro to New Zealand Dollar (EUR/NZD): 1.990273 (+0.41%)
New Zealand Dollar to Dollar (NZD/USD): 0.563003 (0.00%)
DAILY RECAP:
The New Zealand Dollar (NZD) struggled at the start of the week as NZD investors turned cautious ahead of the New Zealand general election.
New Zealanders will head to the ballot box on Saturday, 7 November, with opinion polls suggesting a neck-and-neck race between the ruling National Party and opposition Labour Party.
With neither party commanding a clear lead, uncertainty over the election outcome and the prospect of protracted coalition negotiations weighed on the New Zealand Dollar.
Meanwhile, the Pound (GBP) enjoyed support as UK government borrowing costs continued to fall in the wake of last week’s Autumn Budget.
The UK 10-year gilt yield dropped to its lowest level in six weeks on Monday, as British bond markets continued to recover following a relatively safe Budget.
However, after GBP struck a new 11-year high against NZD, the British currency suffered some profit-taking.
Near-Term GBP/NZD Forecast: Risk Appetite to Drive the Pairing?
Looking ahead, the GBP/NZD pairing may remain relatively quiet during Tuesday’s European session, with economic data thin on the ground.
Amid the absence of economic data drivers, the Pound New Zealand Dollar exchange rate may be driven by market risk appetite, with events in the Middle East likely to determine the mood.
While indirect negotiations between Washington and Tehran are ongoing, any hopes for peace are marred by fears that the US could resume military strikes following the midterm elections. This uncertainty could lead to sharp and sudden swings in risk sentiment, which leaves the GBP/NZD vulnerable to volatility in the near-term.
On Tuesday night, markets will have some New Zealand jobs data to sink their teeth into. If domestic unemployment fell in the third quarter, as expected, the ‘Kiwi’ could climb.
Our currency coverage draws on live market data, official economic releases and published bank research.
