GBP/NZD Exchange Rate Breaks through to NZ$2.00 on Hopes of a Brexit Deal

GBP/NZD Exchange Rate Breaches Key Resistance Level on Brexit Deal Optimism

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is marching higher this morning, with the pairing passing a key resistance level in response to growing optimism on Brexit.

The GBP/NZD exchange rate is now trading at over NZ$2.00, the first time the pairing has breached this level since October 2018.

Pound (GBP) Roars Higher on Juncker’s Brexit Comments

The Pound (GBP) is on the offensive this morning, as the currency continues to ride high on comments made by EU Commission President Jean-Claude Juncker on Thursday.

Sterling rocketed higher on Thursday evening after Juncker in an interview with Sky News, said that he is optimistic ‘we can have a deal’ on Brexit adding that he does not have ‘an erotic relation’ to the Irish backstop and he would back an alternative arrangement if one can be found.

GBP investors seized on his comments, as analysts suggest the odds of a no-deal Brexit have fallen below 20% on Juncker’s optimism.

Brexit Secretary, Steve Barclay and the EU’s Chief Brexit Negotiator Michel Barnier will meet for talks in Brussels later today, with the Pound likely to extend its gains if subsequent Brexit headlines remain upbeat.

New Zealand Dollar (NZD) Stumbles on Souring Trade Headlines

The New Zealand Dollar (NZD) was placed on the defensive overnight on Thursday as US-China trade headlines turned negative.

This included conflicting accounts from White House advisers on the current progress of talks.

Larry Kudlow, Director of the United States National Economic Council appeared positive as he suggested that US officials have seen some ‘softening’ by their Chinese counterparts.

However another senior White House advisor, Michael Pillsbury, appeared less optimistic, as he said Donald Trump is prepared to introduce new tariffs unless more progress is made.

Alongside some chest beating by Chinese media about Beijing’s willingness to hold off on a deal, this has resulted market risk appetite weakening, with in turn has limited the appeal of the ‘Kiwi’ this morning.

GBP/NZD Exchange Rate Forecast: Sterling Braces for another Week of Brexit Developments

Looking ahead to next week’s session, with UK economic data looking pretty thin on the ground, we can expected to see political headlines continue to act as the main catalyst in the Pound New Zealand Dollar (GBP/NZD) exchange rate.

Of course the focus will be on Brexit, with Sterling expected to extend its gains if the UK and EU appear to getting closer to finalising a withdrawal deal.

Also in the spotlight will be the UK Supreme Court’s ruling on whether Boris Johnson’s proroguing of parliament was unlawful, with a defeat for the government potentially turbo charging GBP exchange rates.

Meanwhile, NZD investors are likely to pay close attention to the Reserve Bank of New Zealand’s (RBNZ) latest policy decision next week.

Having previously shocked markets with a rate cut of 50 basis points in August, it’s likely we will see the bank keep rates on hold this month as it waits to assess the impact of recent easing.

However, the RBNZ’s forward guidance will be watched closely for any hints that policy makers may be plotting further cuts, with any hints of additional easing this year likely to send the New Zealand Dollar sharply lower.

Matthew Andrews

Contact Matthew Andrews