GBP/NZD Exchange Rate Eases, Labour Party Attempts to Woo Brexit Rebels to Challenge Deal
The Pound New Zealand Dollar (GBP/NZD) exchange rate eased today, with the pairing currently trading around NZ$2.025 as Prime Minister Boris Johnson continued to push for a ‘yes or no’ vote on his UK-EU Brexit deal.
The Prime Minister faces a battle of wills as the Labour Party attempts to woo Tory Rebels in efforts to gain a dissenting majority. With the Democratic Unionist Party (DUP) already refusing to endorse the deal, Johnson will struggle to make up the numbers.
Keith Starmer, the shadow Brexit secretary, commented:
‘I say to any MP, but particularly the DUP, if you want to work with us to make this situation better, our door is open.’
We could see the Pound recover against the ‘Kiwi’ today if House of Commons Speaker, John Bercow grants a ‘meaningful vote’ following Saturday’s delay which saw MPs postpone a decision until legislation to implement the deal can be passed.
If the Tories find the numbers they need to pass the deal through parliament Sterling would benefit as this would discount a no-deal outcome at the end of October.
In UK ecostats, today saw October’s UK Rightmove house price index, which rose by 0.6%, but with Brexit dominating the headlines this week, data is unlikely to have much effect on Sterling movement.
NZD/GBP Exchange Rate Improves, Chinese Central Bank Holds Interest Rates
The New Zealand Dollar (NZD) improved against the Pound (GBP) today as NZ markets close for the bank holiday, Labour Day.
Meanwhile, the ‘Kiwi’ found continued support from improved market risk appetite following a People’s Bank of China (PBoC) decision to keep interest rates unchanged at 4.20%.
Iris Pang, Economist for Greater China at ING, was downbeat in his assessment:
‘We will have a clearer answer from the central bank [in the fourth-quarter of 2019] as we expect that the PBoC will cut RRR by 0.5 percentage point even if there is a “phase one deal” released in November… The Chinese economy has suffered from a long trade war [since March 2018], and the cumulative damage has been increasingly obvious when you look at the data.’
The NZD/GBP exchange rate will remain sensitive to global economic developments today with any US-China flare-up over the Hong Kong protests likely to trigger a risk-off market and put pressure on the New Zealand Dollar.
GBP/NZD Outlook: Could Sterling Rise on EU Brexit Extension?
With Brexit firmly in the spotlight, Sterling traders will have only limited interest in tomorrow’s mortgage approvals figure for September, though any sign of improvement on the month could increase confidence in the UK economic outlook.
Meanwhile, NZD investors will be looking ahead to Tuesday’s NZ trade balance figure for September, which is expected to show an improvement from NZ$-1565 to NZ$-975 million.
Brexit will command the stage this week, with the GBP/NZD exchange rate likely to improve if Boris Johnson’s deal is ratified by parliament or the EU grants an extension beyond the October 31 deadline. Either outcome would diminish the likelihood of a Halloween no-deal and restore confidence in Sterling.