Risk of Imminent GBP/NZD Exchange Rate Losses on UK Services PMI Slowdown
The Pound to New Zealand Dollar exchange rate has seen a moderate decline on 4th April, following the news that the UK construction sector has contracted in March.
Looking ahead, the Pound to New Zealand Dollar exchange rate could see further losses on the release of PMI data on 5th April.
The latest manufacturing PMI showed unexpected growth, but as mentioned above the latest construction PMI showed sector contraction during March.
The last UK PMI reading of the week will also be the most important of the three, consisting of a measure of services sector activity during March.
The UK services sector is the largest single contributor to UK economic growth, so any signs of a slowdown can have major negative impact on the Pound’s value.
With that in mind, a forecast-matching services PMI slowdown on 5th April could trigger noticeable Pound losses.
Breakthrough in Brexit Talks over Irish Border could Boost GBP/NZD Exchange Rate
Looking further ahead, there is a chance of a Pound to New Zealand Dollar exchange rate recovery on an Irish border breakthrough.
The status of the border after Brexit remains unresolved, with UK and EU officials advocating alternate solutions to the situation.
The last update was the EU’s request for the UK to provide its own solution to the problem; if this is forthcoming in the near-term then the Pound could rally.
Pressure is building for a viable solution to be found to the problem, given that Brexit talks are supposed to be ‘officially’ concluded by October 2018.
Current rumoured solutions include a ‘customs partnership’, which would eliminate the need for a return to a ‘hard border’ with customs checks.
If the UK government announces a lasting solution to the problem in the near-term, this could improve the GBP/NZD exchange rate.
New Zealand Dollar to Pound Exchange Rate Could Rise on Increased NZ Business Activity
This week’s NZ economic data is largely exhausted, so New Zealand Dollar traders will have to look ahead to the coming week for direct sources of NZD movement.
The main release scheduled for next week will be the business NZ PMI for March, which will be released on 12th April.
This overall measure of the health of NZ businesses is predicted to show an increase from 53.4 points to 55.1, indicating economic growth among companies.
Additional NZD/GBP Exchange Rate Gains Possible on US Dollar Decline
Less concretely, New Zealand Dollar to Pound gains could also be triggered in the near-future by any further escalations in the US-China trade war.
China issued a stinging response to US tariff plans on 4th April, but it remains to be seen how the US will react to this forceful countermeasure.
If it looks like tariffs between the two nations are unavoidable then the US Dollar could tumble, resulting in risk sentiment rising and the New Zealand Dollar advancing.
However, if caution wins out and both sides back down rather than risk a commitment to the trade conflict, the US Dollar could rise and worsen the NZD/GBP rate.
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