The Pound has dropped by -0.3% against the New Zealand Dollar today, but the pairing may be able to recoup these losses if peers in the House of Lords react favourably to amendment proposals.
The Lords have been debating the Article 50 bill, which has now passed onto the ‘committee stage’. This means that peers can propose amendments to the bill, and these amendments are expected to have a greater chance of being approved than in the Commons, where no changes were made.
Despite previous warnings that peers should not try to oppose or block the bill’s progress towards royal assent, the Government does not hold a majority in the Lords.
This means that there is a chance of one or many amendments being attached to the bill and, unlike in the Commons, no time limit can be imposed on discussions.
If the Lords do manage to amend the Article 50 bill with one or more alterations that clear up the Brexit process or attempt to maintain UK-EU ties after Brexit happens, then the Pound could rally against the New Zealand Dollar.
With NZD being battered recently by a sizable -3.7% drop in the Global Dairy Trace price index, the national dairy industry is set to remain a key influencer of future New Zealand Dollar movement.
A recent report from Federated Farmers has highlighted that New Zealand’s dairy industry remains ‘a significant player’ in the national economic makeup. Federated Farmers Dairy Industry Chair Andrew Hoggard expanded on this point;
‘Our industry contributes $7.8 billion to New Zealand’s total GDP. That basically means 30% of export dollars coming back into the country is courtesy of dairy’.
While Hoggard has made it clear that dairy is a key component of continued NZ economic prosperity, this fact also shows that the industry must continue to perform well in order to support domestic growth and keep New Zealand Dollar demand up.
If the next Global Dairy Trade price index shows another heavy drop the New Zealand Dollar is likely to slide against the Pound on concerns that dairy farmers will be having a tougher time turning a profit.
Recent Interbank GBP NZD Exchange Rates
At the time of writing, the Pound New Zealand Dollar (GBP NZD) exchange rate was trending in the region of 1.73 and the New Zealand Dollar Pound (NZD GBP) exchange rate was trending in the region of 0.57.
Comments are closed.