GBP/NZD Exchange Rate Slumps on Trump Brexit Comments despite Weak NZ Trade Balance
The Pound New Zealand Dollar (GBP/NZD) exchange rate fell back overnight on Tuesday as US President Donald Trump issued a warning about Theresa May’s Brexit deal.
Speaking to the press outside the White House, Mr Trump gave his opinion on the latest deal to be struck between the UK and EU, saying he thought it ‘sounds like a great deal for the EU.’
Mr Trump then went on to warn that if the EU withdrawal bill is passed by Parliament it could hinder future UK-US trade relations.
‘Right now if you look at the deal, [the UK] may not be able to trade with us. And that wouldn’t be a good thing. I don’t think they meant that,’ he said.
The British government was quick to brush off the comments, saying that the US president was mistaken as officials insisted that the agreement would allow the UK to sign new trade deals outside the EU and that talks between the UK and US had already laid the groundwork for an ‘ambitious agreement’.
Nevertheless, Sterling sentiment remained under pressure with the Pound New Zealand Dollar (GBP/NZD) exchange rate falling on Trump’s comments despite the ‘Kiwi’ being held back by a weaker-than-expected domestic trade balance and some other comments from Trump – these ones concerning China.
At the time of writing on Tuesday the GBP/NZD exchange rate was down around 0.7% on the day.
New Zealand Dollar (NZD) Exchange Rates hit by Upsurge in Global Trade Worries as Trump Threatens More Chinese Tariffs
The ‘Kiwi’ along with other risk-sensitive currencies has found itself under pressure today as news broke that US President Donald Trump was in a combative mood ahead of the G20 meeting later this week in Buenos Aires.
Currency markets had been hoping that Trump would be working to repair cracked trade relations with China when he meets with Chinese premier Xi Jinping in Argentina.
Instead, Mr Trump seems to be doubling down on his bellicose rhetoric, promising to hike tariffs on Chinese products by up to 25% and push forward plans to slap levies on an additional $200bn of imports from the Asian nation.
His comments led to decreased risk sentiment, with traders rushing to seek shelter in the safe harbour of the US Dollar, pulling money out of risk-sensitive currencies like the New Zealand Dollar.
GBP/NZD Exchange Rate Outlook: BoE Brexit Deal Assessment in Focus
Looking ahead to the remainder of this week, movement in the Pound Sterling New Zealand (GBP/NZD) exchange rate is likely to be affected by the Bank of England’s (BoE) latest Financial Stability Review, due out tomorrow.
The much-anticipated review is expected to include not just the BoE’s latest economic forecasts but also its official assessment of the economic effects of the proposed Brexit deal in comparison to a no-deal Brexit.
This is not the only financial stability report coming out, with New Zealand releasing their own later on today.
Immediately after its release the Reserve Bank of New Zealand’s Adrian Orr will be giving a speech, with investors keen to hear whether he will dropping any hints about monetary policy as we head into 2019.
In the meantime, and for the rest of the week, trade in GBP/NZD is likely to be driven by political considerations, with Sterling remaining very sensitive to Brexit headlines, and the ‘Kiwi’ being equally sensitive to global trade concerns ahead of the G20 meeting.