GBP/NZD Exchange Rate Slumps as Key Brexit Cabinet Meeting Looms
The Pound New Zealand Dollar (GBP/NZD) exchange rate has dropped sharply this morning by 0.8%, despite an attempt by Sterling at the start of the week to push back against last week’s losses.
A drop in the GBP/NZD exchange rates from NZ$1.92 to NZ$1.91 later this morning shows the ‘Kiwi’ pushing back against Sterling.
The October UK Consumer Price Index and Core Consumer Price Index held steady when they printed this morning, with both figures remaining unchanged from September’s reading, 2.4% and 1.9% respectively.
Brexit Optimism and ‘Bullish Sentiment’ Pushes up GBP/NZD Exchange Rate
Overnight, the volatility of Sterling jumped to its highest since the UK general election in 2017.
The Pound (GBP) jumped higher during the trading session yesterday, as the optimistic atmosphere surrounding Brexit continued with reports of the UK and EU agreeing to the text for a draft withdrawal agreement.
Michael McCarthy, chief market strategist at CMC markets said: ‘The bullish sentiment has certainly returned for the Pound but we need to see the finer details of the draft deal and May needs support from her ministers.’
Brexit optimism was aided by the latest UK labour report yesterday, which showed wage growth continuing to accelerate at the end of the third quarter despite unemployment rising slightly.
GBP/NZD Rises Despite New Zealand House Sales Hitting Five-Month High
The New Zealand food price index for October revealed some disappointing figure on Monday, showing a worse-than-expected contraction from -0.1% to -0.6%.
Despite this, the New Zealand Dollar was strengthened by headlines indicating a potential thaw in tensions between the USA and China as Chinese Vice-Premier Liu He is intending to travel to the US this month.
Furthermore, the REINZ House Sales figures released late on Tuesday showed a leap to 15.5% from a previous figure of -0.3%, making it the highest number of sales in five months, boosting ‘Kiwi’ sentiment.
Return of Brexit Pessimism Likely to See GBP/NZD Exchange Rates Fall
Thursday will see the release of the Business NZ Manufacturing PMI in New Zealand, and if there is an increase from the previous 51.7 it could potentially strengthen the ‘Kiwi’.
Nevertheless, today’s focus remains on Theresa May and whether or not she will be able to get her draft text for Brexit past her cabinet colleagues.
Mrs May is going to have to rely on support from the DUP in order to get her draft through, with this feat being arguably one of the Prime Minister’s greatest challenges so far, with the immediate fate of GBP/NZD depending on the outcome.