GBP/NZD Exchange Rate Steadies on Ebbing No-Deal Brexit Fears
The Pound New Zealand Dollar (GBP/NZD) exchange rate steadied at around NZ$1.929 today as UK markets absorbed the implementation of the anti no-deal Brexit bill. Yesterday saw the bill pass its first and secondary votes with a majority of 327 to 299 and 329 to 300 respectively.
Despite ebbing no-deal Brexit fears, the Pound has failed to make any notable gains on the New Zealand Dollar today, with Prime Minister Boris Johnson now having until October 19 to negotiate a new deal with the EU.
Meanwhile, the focus remains on the House of Lords, which have agreed to push through all stages the bill of preventing a no-deal Brexit by Friday.
Chancellor Sajid Javid, echoed Downing Street’s request for a general election, said:
‘[U]nfortunately we’ve got to a position where we have to have a general election because we need to let the British people decide – this paralysis in Parliament cannot continue.’
The New Zealand Dollar has remained steady today on a lack of economic data, with the ‘Kiwi’s movement likely being dictated by geopolitical developments instead.
NZD/GBP Exchange Rate Rangebound as US-China Negotiations Penned for October
The New Zealand Dollar failed to benefit from a return of risk-appetite today after the announcement that US and China have agreed to meet in October to negotiate trade.
The Chinese Commerce Ministry said in its statement:
‘Both sides agreed they should work together and take practical actions to create favorable conditions for the negotiations.’
A spokesperson for the United States Trade Representative, also added that the discussions would aim to ‘lay the ground work for meaningful progress’ between the two superpowers.
However, after China signalled further stimulus as global economic headwinds rise, New Zealand markets have become increasingly cautious, as this could directly affect the NZ economy.
Song Yu, Chief China Economist a Gao Hua Securities, commented:
‘This is the strongest loosening signal from any policy meeting year-to-date. The expected policy measures should provide support to the real economy, reducing the risks of a dramatic slowdown in the second half.’
GBP/NZD Outlook: Brexit Developments to Remain in Focus
UK investors will be looking ahead to tomorrow’s publication of August’s Halifax House Prices figure, which is expected to improve on the month from -0.2% to 0.2%.
Tomorrow will also see the release of the UK’s consumer inflation expectations.
The GBP/NZD exchange rate will likely remain driven by political developments in the coming days. If the anti no-deal Brexit bill passes successfully through the House of Lords, we could see Sterling edge higher against the New Zealand Dollar as a disorderly exit would be effectively avoided in October.