GBP/NZD Exchange Rate Eases on Renewed Brexit Uncertainty
The Pound New Zealand Dollar (GBP/NZD) exchange rate eased today, with the pairing currently trading around NZ$2.016.
Prime Minister Boris Johnson is seeking two crucial votes this evening; the first on a Withdrawal Agreement Bill (WAB), which secures the UK-EU Brexit deal, and the second on a ‘programme motion’ which aims to force through the deal before the October 31 deadline.
Veteran Conservative MP Ken Clarke was critical of the short timetable:
‘Unless you are prepared to contemplate more expansive debate, there is not the slightest possibility of considering the deal that has been obtained within the time available.’
The GBP/NZD exchange rate could improve if Boris Johnson secures the WAB as this would effectively eliminate a no-deal Brexit scenario next Thursday.
However, UK markets will be paying close attention to any bolt-on amendments, with the Labour Party expected to push for a customs union and a clause calling for a confirmatory referendum.
A referendum amendment would likely see Sterling decline in the near-term on increased Brexit uncertainty while a more clear-cut vote in favour of the deal would see Sterling rise as markets welcome clarity ahead of the October 31st deadline.
In UK ecostats, today saw the UK’s public sector net borrowing figure for September beat forecasts, rising from £4.918 billion to £8.734 billion. However, with Brexit dominating headlines, the data had no effect on Sterling movement.
NZD/GBP Exchange Rate Rises, US-China Trade Talks ‘Coming Along Very Well’
The New Zealand Dollar (NZD) rose against the Pound (GBP) today as a risk-on market continued to buoy the ‘Kiwi’.
US President Donald Trump’s announcement that US-China trade talks were “coming along very well” also benefitted the NZD/GBP exchange rate on hopes that New Zealand’s closest trading partner might secure a deal with the US by next month.
However, with analysts increasingly gloomy over China’s economic slowdown, we could see NZD gains clipped if relations between the US and China deteriorate.
Jennifer Lee, Senior Economist and Director at BMO Capital Markets, commented:
‘China is still reliant on trade, even though exports as the share of the economy has declined. The tariffs that the U.S. has imposed on China’s goods that cross over the Pacific are hurting those industries.’
With September’s New Zealand trade balance expected to weaken from NZ$-5.48 billion to NZ$5.49 billion on the year, we could see the ‘Kiwi’ lose some of its shine, though the effect may prove negligible compared with global trade news.
GBP/NZD Outlook: Sterling could soar if Parliament Accepts Boris Johnson’s Brexit Plan
NZD traders will focus on global economic developments and US-China trade talks this week, with positive developments likely to see market appetite in the ‘Kiwi’ increase.
Brexit will remain firmly in the driving seat for the GBP/NZD exchange rate, meanwhile, with Sterling likely to rocket if Boris Johnson’s Withdrawal Agreement Bill and ‘programme motion’ pass the vote.
An improvement in tomorrow’s UK BBA mortgage approvals figures for September could paint a brighter picture for the UK economy, but with Brexit dominating headlines, data is unlikely to have any effect on GBP movement.