The New Zealand dollar (NZD) fell to its lowest level against the British pound since before the UK's Brexit referendum, as renewed tensions between China and the United States weighed on investor sentiment.
The pound to New Zealand dollar exchange rate rose to 2.3434 on Tuesday, a level last seen in October 2015, after China imposed sanctions on the U.S. units of Hanwha Ocean, one of the world's largest shipbuilders. While the move has no direct impact on New Zealand, the NZD remains closely tied to sentiment surrounding the Chinese economy due to the country's role as New Zealand's largest export market.
Traders anticipate that any escalation in the ongoing China-U.S. trade conflict could negatively affect New Zealand's export-driven economy, particularly in sectors reliant on Chinese demand. The sanctions are seen as part of China's broader strategy to strengthen its position ahead of potential trade negotiations with the United States.
Market attention is now turning to the Asia-Pacific Economic Cooperation (APAC) conference in South Korea at the end of October, where U.S. President Donald Trump and China's President Xi Jinping are expected to meet. Analysts expect further developments in the coming weeks, with both nations seeking leverage ahead of any potential agreement. This ongoing uncertainty is likely to continue pressuring the New Zealand dollar in the short term.
Source: Investing.com
