Pound New Zealand Dollar 2017 Outlook Improves This Week
While the Pound New Zealand Dollar 2017 exchange rate as fallen from the highs seen on Tuesday, Tuesday’s Brexit speech from UK Prime Minister Theresa May definitely improved the long-term outlook for Sterling trade.
May clarified that while the UK government would not aim for full single market access following the Brexit, May would also not settle for a bad UK-EU trade deal. To show the government’s tough negotiation stance, May stated she would sooner deny a deal than accept one that was bad for Britain.
Wednesday’s news that the UK Supreme Court judgement on the Article 50 challenge would finally be made on the 24th of January also bolstered demand for the Pound.
The stronger the chance of a good UK-EU trade deal post-Brexit, the better the Pound’s long-term movement will be. As a result, this week has been a good one for the Pound outlook.
[Published 11:20 GMT 16/01/2017]
The Pound New Zealand Dollar 2017 exchange rate has fallen to its worst levels in over two months in the last week. Depending on this week’s Brexit speech from UK Prime Minister Theresa May, it could see its long-term downside movement worsen further. GBP NZD hit 1.68 on Monday morning; its worst level since early November 2016.
Pound (GBP) Undermined by Expectation of Britain’s Single Market Withdrawal
At numerous points last week the Pound was sold off on concerns that the UK government was becoming increasingly vocal on the likelihood of a ‘Hard Brexit’.
This movement has worsened this morning when investors reacted to reports from the weekend. Various sources claimed that UK Prime Minister Theresa May would clarify further in her upcoming speech that the UK will be withdrawing fully from the EU and would instead aim for new trade deals with other nations.
The possibility that the UK would be able to maintain full single market access even after leaving the European Union has been called a ‘soft Brexit’ by the media, with a full withdrawal being labelled a ‘hard Brexit’.
May claims that she does not recognise the concept of a ‘hard Brexit’, but this ‘hard Brexit’ is exactly what investors are likely to be panicking about following her speech on Tuesday.
New Zealand Dollar (NZD) Strengthens Against GBP Despite Limited Risk Demand
Due to the considerable weakness of the Pound this week, the New Zealand Dollar has been able to advance and push GBP NZD to its worst levels in months.
However, the New Zealand Dollar’s performance has generally worsened this week as risk-sentiment fades ahead of the inauguration of US President-elect Donald Trump on Friday the 20th of January.
Investors rushed out of the US Dollar (USD) into the higher yielding ‘Kiwi’ last week to generate better returns ahead of Trump’s inauguration. However, traders have been seeking out safe currencies like the Japanese Yen (JPY) instead this week, limiting New Zealand Dollar demand.
Pound New Zealand Dollar 2017 Long-Term Forecast: Brexit Trade Fears and Risk Sentiment in Focus
The biggest influencer for the Pound’s short to mid-term movement this week will be the highly anticipated Brexit speech from UK Prime Minister Theresa May.
May is expected to clarify the government stance on Brexit and, according to reports, will announce that the UK will give up single market access in favour of increased migration controls.
Analysts expect the Pound will fall following the speech on the 17th and if investors continue to lose hope for single market access the Pound will see mid to long-term pressure.
The first year of the US Trump Presidency is likely to be among the biggest driving factors for New Zealand Dollar trade in the mid to long-term. Investors will avoid riskier currencies in high uncertainty, particularly if the US sees an economic boost or if Trump cuts trade deals as some fear.
Developments in the dairy trade industry will also serve as an important long-term factor for NZD trade as always. The next Global Dairy Trade (GDT) auction is due to take place on the 17th of January and is likely to influence short-term NZD movement, while giving traders a better idea of the mid-term movement in dairy trade.
GBP NZD Interbank Rate
At the time of writing, the Pound New Zealand Dollar 2017 exchange rate trended at around 1.71, while the New Zealand Dollar Pound exchange rate traded at around 0.58.
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