GBP/NZD Exchange Rate Tumbles Ahead of Johnson-Juncker meeting
The Pound New Zealand Dollar (GBP/NZD) exchange rate is trending lower this morning ahead of Boris Johnson’s meeting with European Commission President Jean-Claude Juncker later today.
At the time of writing the GBP/NZD exchange rate has climbed to around NZ$1.9502, down roughly 0.5% from this morning’s opening levels.
Pound (GBP) to Suffer Setback as Boris Johnson to Turn Down Brexit Delay?
The Pound (GBP) roared higher last week on renewed hopes that the UK and EU could finalise a Brexit withdrawal deal in time for the next EU summit on 19 October.
However this optimism was dealt a blow over the weekend, with Sterling put back on the defensive this morning after EU officials said the UK still needs firmly outline its plans replace the Irish backstop.
Adding to the pressure on the Pound this morning are also reports that Boris Johnson will tell Jean-Claude Juncker that the UK will not accept any offer of another Brexit delay.
It’s thought Johnson will continue to stress that his government wants to reach a deal, but that he is not prepared to accept another extension, despite the passing of a law compelling him to do so.
Unsurprisingly this is likely to spook GBP investors and could result in the Pound relinquishing some of the gains made in recent weeks.
Could Lacklustre GDP Figures Undermine the New Zealand Dollar (NZD)?
The main catalyst of movement in the New Zealand Dollar (GBP) this week looks likely to be the publication of New Zealand’s GDP figures on Wednesday.
Current consensus forecasts suggest economic growth will have slowed to 0.4% in the second quarter, from a 0.6% expansion in the first quarter.
Such a slowdown could point to further rate cuts from the Reserve Bank of New Zealand (RBNZ) this year, likely limiting the appeal of the ‘Kiwi’.
However some economists are more optimistic, with analysts at Westpac predicting robust service sector activity will have allowed New Zealand to maintain its current pace of expansion.
BoE Brexit Outlook to Influence GBP Exchange Rates this Week?
Also in the sights of GBP investors this week will be the Bank of England’s (BoE) latest policy decision.
Given the recent resilience in the UK economy it’s unlikely the bank will make any chances to monetary policy this month.
Lee Sue Ann, Economist at UOB Group suggests:
‘The BoE is unlikely to act for now. Coupled with the latest unemployment figures, the solid wage growth story will likely keep the BoE comfortable in keeping interest rates on hold until the path of Brexit becomes clearer.’
However there is still the potential for Sterling sentiment to be influenced by the BoE’s latest thoughts on Brexit.