Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises Ahead of Brexit Negotiations
The Pound New Zealand Dollar (GBP/NZD) exchange rate edged higher on Monday morning with the pairing currently trading at around NZ$1.9601.
The Pound (GBP) rose despite reports that the EU will not make a decision on the British government’s Brexit proposal until the end of the week.
Prime Minister Boris Johnson previously indicated a willingness to comply with legislation and seek an extension from the EU if a deal could not be reached by October 19.
However, in a telephone call over the weekend, Johnson warned French premier Emmanuel Macron that the EU should not be ‘lured’ into thinking there would be a delay beyond the Halloween deadline and that a deal relies on an EU compromise.
An anonymous senior Number 10 source said:
‘The UK has made a big, important offer but it’s time for the Commission to show a willingness to compromise too. If not the UK will leave with no deal.’
The chances of a forthcoming deal between the UK and EU are slim, with ING analysts pricing in a mere 10-15% chance.
New Zealand Dollar (NZD) Falls Ahead of US-China Trade Talks
Meanwhile, the New Zealand Dollar remained under pressure ahead of face-to-face US-China talks, with mixed reports over the past week describing an uncertain state of play between the two superpowers.
Bloomberg reports suggest Chinese officials are willing to discuss a narrower range of topics than the United States wants and require a greater reduction in tariffs on Chinese goods.
Dampened risk-appetite saw the ‘Kiwi’ slump as investors priced in the reduced chance both sides will reach a mutually accessible agreement.
Commenting on this, analysts from DBS Bank in Singapore wrote in a note:
‘The odds remain low for a trade deal. Washington wants to get the whole deal done but Beijing is unwilling to do so without the US rolling back tariffs.’
Asia-Pacific chief economist at ING, Rob Carnell said:
‘Nothing is yet in the bag, and optimism on trade has proved time and again to be misplaced.’
Pound New Zealand Dollar Outlook: Will a Dovish BoE Governor Weigh on GBP?
Looking ahead to Tuesday, the Pound could slide against the New Zealand Dollar following the release of UK like-for-like retail sales.
Sterling could be left under pressure if the British Retail Consortium reveals a drop in September sales.
Meanwhile, a speech from the Bank of England (BoE) Governor Mark Carney could see the Pound extend its losses against NZD tomorrow if his tone proves dovish.