Pound v New Zealand dollar: GBP plummets to six-week low against NZD

THE pound versus New Zealand dollar exchange rate trended lower on Wednesday as recent UK polling data cast doubts over the upcoming general election.

Pound exchange rateGETTY

The pound has hit a six-week low against the New Zealand dollar

Sterling is currently at NZ$1.799 against the New Zealand dollar, down 0.42 per cent from a high of NZ$1.810 today and down by around two cents from the week’s best levels.

Market sentiment in the pound plummeted overnight on Tuesday as the latest YouGov poll suggested that the Conservatives may not gain the seats they need for an outright majority.

With little more than a week to go before the election, the data has caused some alarm in investors who fear the impact a hung parliament may have on the upcoming Brexit negotiations.

This is a huge turnaround from when the election was first called in April, with polls showing at the time that Theresa May enjoyed a 24 point lead over Jeremy Corbyn and was expected to take the Tories to a landslide victory.

Abbott: Labour will work with Bank of England to stabilise pound

However, recent missteps by the Prime Minister and a number of controversial policies in the Conservative manifesto have caused the party to alienate some of its core voters, providing Labour with an opportunity to make up some lost ground between.

Observers are quick to note however that the data should not always be taken at face value and while markets have focused on the possibility of the Conservatives losing their majority, the polling figures suggest that the number of seats the party may win could be anywhere between 274 and 345.

New Zealand dollarGETTY

GBP currently sits at NZ$1.799, down around two cents from the weeks best level

Meanwhile, the New Zealand dollar has strengthened following the latest Financial Stability Report from the Reserve Bank of New Zealand (RBNZ).

While the bank remained concerned over house prices and increasing global political uncertainty it painted a more upbeat outlook for the country's financial system, suggesting that risks both domestic and abroad have declined in recent months.

Jeremy CorbynGETTY

A YouGov poll predicting Tory losses and a hung Parliament has hit market sentiment

While markets do not forecast that this will have an impact on the RBNZ’s monetary policy in the short term, investors are hopeful that should the bank’s outlook remain positive over the coming months then it may be prompted to begin discussing the possibility of raising interest rates.

Looking ahead, the GBP/NZD exchange rate may tumble even further on Thursday following the release of Britain’s latest manufacturing PMI, with analysts predicting that activity fell from 57.3 to 56.5 in May, with a drop likely to prompt fears that the UK’s economic growth in the second quarter may not be as strong as economists had first predicted.

Meanwhile, the New Zealand Dollar may cede some ground later this evening as domestic trade figures are expected to have fallen from 5.7 per cent to 3.9 per cent during the first quarter.

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