GBP/NZD Exchange Rate Subdued amidst Brexit Jitters
The Pound New Zealand Dollar (GBP/NZD) exchange rate is trending lower this morning as Brexit was thrust back into the spotlight by comments from UK Chancellor Sajid Javid.
At the time of writing the GBP/NZD exchange rate is trading at around NZ$1.9612, down roughly 0.3% from this morning’s opening levels.
Pound (GBP) Dented on Hard Brexit Fears
The Pound (GBP) has been put on the back foot this morning, as traders respond to Brexit comments made by Sajid Javid made over the weekend.
Speaking to the Financial Times on Saturday, the UK chancellor urged business to adjust to the realities of Brexit, warning the UK government will end alignment with EU regulation.
‘There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.’
UK business have warned this could cause major disruption to the UK economy.
GBP investors also fear that divergence from EU regulations will make it more difficult for Boris Johnson to secure a trade deal and avoid a no-deal Brexit, as the EU seeks to ensure the UK maintains a ‘level playing field’ with the continent.
New Zealand Dollar (NZD) Buoyed in Risk-On Trade
The New Zealand Dollar (NZD) is trending higher this morning, buoyed by a risk-on mood in markets.
Despite a lukewarm response from analysts, the signing of the US-China ‘phase one’ trade deal has proved supportive of risk-sensitive currencies on hopes tensions between the two powers will continue to ease.
However this upside remains capped amidst broad strength in the US Dollar (USD).
GBP/NZD Forecast: Slowing Wage Growth to Undermine Sterling?
Looking ahead, the Pound to New Zealand Dollar (GBP/NZD) exchange rate is likely to extend its losses on Tuesday, with the publication of the UK’s latest labour report.
While unemployment is expected to remain unchanged, economists forecast wage growth will have continued to slow in November, something which is likely to further increase the odds that the Bank of England (BoE) will cut interest rates this month.
In the meantime, the ‘Kiwi’ could face some pressure overnight with the publication of New Zealand’s services PMI, amidst forecasts service sector growth slowed in December.