The Pound failed to hold onto its positive momentum for long in the wake of the EU agreeing to proceed to the next phase of Brexit talks, with a sense of uncertainty still prevailing.
As the Conservative government still lacks any major sense of unity on the subject of Brexit GBP exchange rates remain vulnerable to downside pressure.
Investors were also discouraged by the tone of comments from chief EU negotiator Michel Barnier, who has maintained that the UK cannot have a bespoke trade agreement.
This does not bode well for London’s financial sector, suggesting that it will lose the key passporting rights that have made it such an attractive hub in the past.
Naturally any significant negative impact on the financial sector, a key driver of the UK economy, would weigh heavily on the Pound.
Even so, the Pound New Zealand Dollar exchange rate could find some support in the near term if November’s public sector net borrowing figure proves encouraging.
Any slowing in the accumulation of new government debt would give investors fresh reason to favour Sterling, even though the UK economy still looks decidedly fragile to any deterioration in trade conditions.
On the other hand, an increase in borrowing could leave the GBP NZD exchange rate on a downtrend heading into the Christmas long weekend.
ANZ Activity Outlook Optimism Shores up NZD Exchange Rates
Demand for the New Zealand Dollar, meanwhile, picked up in response to a sharp uptick in the ANZ activity outlook.
As the measure jumped from 6.5 to 15.6 in December this encouraged confidence in the underlying health of the New Zealand economy, boosting the ‘Kiwi’ against its rivals.
Analysts at ANZ viewed the data relatively positively, noting:
‘We are not ready to call time on the cycle just yet. The drivers of growth are shifting, and such transitions are often not smooth, but there are still enough positive forces that we expect to see growth return to broadly around trend over the next couple of years (but probably not much more). In itself, trend growth is unlikely to be enough to get domestic inflation pressures up in a sustainable fashion, but signs of more cost-push pressures from the labour market are something that we think the RBNZ will eventually respond to, albeit in a tip-toe fashion.’
Even so, the weakness of the GBP NZD exchange rate was somewhat limited thanks to a faltering of the fourth quarter Westpac consumer confidence index.
Tonight’s raft of trade data could also put pressure on the New Zealand Dollar, with any deterioration in export volumes likely to prompt renewed selling.
Current GBP NZD Interbank Exchange Rates
At the time of writing, the Pound New Zealand Dollar exchange rate was slumped in the region of 1.9055. Meanwhile, the New Zealand Dollar Pound exchange rate was making solid gains around 0.5246.