Pound to New Zealand Dollar Slips as Soft Brexit Supporter Greening Resigns from UK Government
While only about a quarter of a cent down so far, the Pound to New Zealand Dollar (GBP/NZD) exchange rate has slipped from near the week’s opening levels 1.8930 following news that the UK government cabinet reshuffle had not gone as Prime Minister Theresa May had hoped.
Now ex-Secretary of Education, Justine Greening, resigned from her role in government after refusing a new job as work and pensions secretary.
Greening was one of the cabinet members who advocated a ‘soft Brexit’ and there is speculation that her resignation comes following multiple reports of resistances from cabinet members to move to certain positions.
Some backbenchers from within the Conservative Party, as well as MPs from opposing parties, criticised the reshuffle as ineffective and potentially even undermining UK Prime Minister Theresa May’s authority.
The news weighed slightly on Sterling (GBP) on Tuesday amid concerns that the UK government had lost a ‘soft Brexit’ supporter and that May was still thought to be perceived as a relatively weak leader for the key Brexit process.
New Zealand Dollar (NZD) Exchange Rates Higher Despite Lack of Domestic Support
Despite a lack of notable New Zealand data in recent sessions, the New Zealand Dollar (NZD) has been able to edge higher against the Pound.
The New Zealand Dollar was supported last week by stronger commodity data, as prices of New Zealand’s most lucrative commodity, dairy, saw their biggest rise in over half a year. Other commodities such as oil were strong too, boosting demand for commodity-correlated risky currencies like NZD.
Global factors have also affected New Zealand Dollar trade in recent sessions. As the global growth outlook has improved, investors are less keen to hold onto ‘safe haven’ currencies like the Japanese Yen (JPY) and are buying riskier currencies instead.
Pound to New Zealand Dollar Forecast: Could UK Data Influence Pound Outlook?
Wednesday’s data publications are set to be the most influential this week for Pound to New Zealand Dollar (GBP/NZD) exchange rate traders, but are still unlikely to significantly change the outlook for the pair.
Sterling could be influenced slightly by November’s UK trade deficit update, as well as November’s manufacturing production and industrial production stats. These will give markets a more solid idea of how Britain’s economy was performing towards the end of 2017.
Overall though, if these datasets come in near expectations the Pound’s trajectory will likely remain limited.
Instead, Pound investors will be looking for any signs of political developments or comments related to the Brexit process from the UK government.
Any further changes to the UK government cabinet could also influence the Pound outlook if the balance on the tone of Brexit negotiations is perceived to have shifted. It’s likely that most of the changes left to be made will be in more junior roles however.
As for the New Zealand Dollar, it is forecast to continue to be moved by market risk-sentiment. If investors see a need to buy back into ‘safe haven’ currencies, GBP/NZD will recover more easily.
However, NZ building permits data, due Friday, could also influence the New Zealand Dollar if it surprises traders.