Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as PM Awaits EU Brexit Decision
The Pound New Zealand Dollar (GBP/NZD) exchange rate edged up this morning, and the pairing is currently trading at around NZ$2.0177.
The pairing rose as Downing Street dismissed reports that Boris Johnson’s government is split on how to move forward with the Brexit process.
Earlier in the week lawmakers forced the Prime Minister to put his Brexit bill on hold after they voted against fast-tracking the bill through parliament despite voting in favour of the agreement.
The Prime Minister now awaits the decision of the European Union as to whether they will grant a delay and the length of time for the delay.
However, reports have suggested French President Emmanuel Macron wants a delay of no more than 15 days from the deadline.
Meanwhile, other member states believe this is not a long enough delay, and Germany’s Angela Merkel has come out in support of a three-month delay.
Although, the government has made it clear that if the EU offers an extension of this length they will push for a general election.
Commenting on this, FXTM Chief Market Strategist, Hussein Sayed noted:
‘Although the French are pushing for a tighter deadline, the base case scenario remains until January 31. If this extension is granted, then a UK general election will likely be the next step.
‘If an election is called and approved by the House of Commons, expect to see more volatility in Sterling, although any downside pressure will be limited given that a hard Brexit scenario is now off the table.’
New Zealand Dollar (NZD) Under Pressure as Republicans Try to Push through Hong Kong Human Rights Bill
The New Zealand Dollar was left under pressure on Thursday ahead of US Vice President Mike Pence’s speech on US-China relations.
There are concerns that Pence will highlight human rights abuses from China which could exacerbate tensions between the two countries.
Added to this, reports have suggested that Republican lawmakers are making attempts to get President Donald Trump to approve a Hong Kong human rights bill.
However, any progress on the bill and harsh comments about Beijing from Pence could cause risk appetite to slump ahead of the Asia-Pacific Economic Cooperation meeting next month.
During the meeting, President Trump and his Chinese counterpart, Xi Jinping are expected to sign the preliminary trade deal.
Pound New Zealand Dollar Outlook: Will NZD Slide on Mike Pence Speech?
Looking ahead to US Vice President Mike Pence’s scheduled speech, after his strong criticism of China in a speech from October 2018 caused tensions to escalate, traders are looking to see if tensions will rise once again.
If Pence’s speech increases tensions between Washington and Beijing, it is likely the risk-sensitive New Zealand Dollar will be left dampened.
Meanwhile, Brexit is likely to remain one of the main catalysts for the movement of the Pound New Zealand Dollar (GBP/NZD) exchange rate.
If the European Union offers the UK a three-month delay, it could leave Sterling under pressure and the pairing muted as increased Brexit uncertainty is likely to leave the Pound on the back foot.