Pound New Zealand Dollar (GBP/NZD) Rises on Brexit Deal Sentiment despite Downing Street Denials
The Pound New Zealand Dollar (GBP/NZD) rebounded slightly after Monday’s Brexit deal uncertainty, with EU Chief Negotiator Michel Barnier assuring ministers that a Brexit text was ‘almost ready’.
However hopes were slightly quelled by assertions by a Downing Street spokesman who said that any talk of an imminent deal should be taken with a ‘bucket of salt’.
Brexit news aside, the New Zealand Dollar was strengthened earlier by some headlines indicating progress in US-China trade relations, although the currency is now trading down around 0.25% against the Pound on the day with GBP/NZD hitting an inter-bank exchange rate of NZ$1.92.
GBP/NZD Exchange Rate Volatile as Theresa May Announces Brexit ‘Endgame’
The GBP/NZD pairing showed some short-term losses yesterday when Brexit headlines alarmed investors, however with Theresa May’s so-called ‘endgame’ apparently being imminent, Sterling has strengthened.
Brexit risks have remained high however, with the remaining problems in talks deemed ‘knotty’ by Cabinet Office Minister David Lidington, who nevertheless claimed at the same time that a deal was ‘within touching distance’.
Optimism over the UK’s wage growth running at a 10-year high has been muted due to this uncertainty, however Sterling did find some support from the fact that average earnings were rising at their fastest rate since December 2008.
Increased wage growth will likely result in increased consumer spending over the festive period, boosting the economic outlook and possibly providing an incentive for the Bank of England (BoE) to raise interest rates at a faster pace.
NZD/GBP Exchange Rates Benefit from US-China Negotiations ahead of G20 Summit
The New Zealand Dollar Pound (NZD/GBP) exchange rate briefly rallied against the Pound earlier as concerns about Brexit hit the British currency.
The ‘Kiwi’ also saw a rise due to US President Donald Trump’s more conciliatory tone over trade with China, with US-China trade talks seemingly likely to take place ahead of the G20 Summit later this month.
However, with New Zealand’s October food price index contracting by -0.6%, any further signs of weak inflationary pressure will dampen the likelihood of changes to monetary policy from the Reserve Bank of New Zealand.
GBP/NZD Exchange Rate Outlook: Brexit Skewers Pound Optimism as ‘Kiwi’ Steadies on US-China Trade Talks Rumours
There isn’t much in the way of fresh New Zealand data being published this week, so the Pound to New Zealand Dollar (GBP/NZD) exchange rate is more likely to be influenced by Brexit developments going forwards.
On the other hand, any new trade developments between the US and China could significantly alter risk sentiment and have a knock-on effect on the GBP/NZD exchange rate.