GBP/NZD Exchange Rate Retreats as Brexit Pessimism Grows
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate remains on the defensive this morning, extending the week’s losses as Brexit uncertainty continues to dampen Sterling sentiment.
At the time of writing the GBP/NZD exchange rate is trading at around NZ$1.9507, down roughly 0.3% from today’s opening rate and leaving the paring at a two-week low.
Pound (GBP) Weakens as Brexit Impasse Continues to Take its Toll
The Pound (GBP) is trending lower against the New Zealand Dollar (NZD) again this morning as it continues to be battered by Brexit uncertainty.
This comes as GBP investors remain frustrated by the lack of progress in cross-party Brexit talks, which have rolled on for other a month, with the government and Labour seemingly unable to compromise on how to move forward with Brexit.
Applying more pressure on Sterling this morning is the growing speculation regarding the future of Theresa May’s premiership.
May will meet with senior Conservative MPs today as she faces growing calls to outline a timetable for when she will step down as PM.
While the PM is protected from another formal leadership challenge until December, it’s becoming increasingly clear that her position is becoming untenable given the pressure from her party and the likelihood of heavy losses in the upcoming EU elections.
However, less clear is who would fill May’s boots once she is gone, with GBP investors nervous about the prospect that the UK could end up with a PM who advocates a no-deal Brexit.
New Zealand Dollar (NZD) Gains Capped as US Blacklists Huawei
Meanwhile, the New Zealand Dollar (NZD) finds its advance tempered following the announcement that the US will blacklist Huawei and its affiliates from operating in the US – a move that will likely further escalate tensions between the US and China.
The move comes as Donald Trump declared a national emergency banning US companies from using foreign telecoms companies that may pose a threat to national security.
The move unsurprisingly did not go down well with Beijing, which warned the US against ‘harming’ trade ties over the ban.
GBP/NZD Exchange Rate Forecast: Escalating Trade Tensions to Hurt the ‘Kiwi’?
Looking ahead, the Pound New Zealand Dollar (GBP/NZD) exchange rate could still bounce back by the end of this week’s session depending on how China responds to Washington’s move to bar Huawei from the US market.
This might see the risk-sensitive ‘Kiwi’ come under pressure if Beijing escalates tensions even further by responding with its own tit-for-tat measure targeting Apple or other major US tech companies.
However at the same time, any upside in Sterling is likely to remain limited, with political uncertainty in the UK expected to continue to act as a dampener on GBP exchange rates.