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Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Plummets as Brexit Deal ‘Essentially Impossible’

New Zealand Dollar Currency Forecast

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as Brexit Talks Close to Collapse

UPDATE: The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped by around -1% and the pairing is currently trading at around NZ$1.9325.

The Pound plummeted following reports that a Downing Street source said a Brexit deal is ‘essentially impossible’.

The source revealed that during a phone call between the Prime Minister and German Chancellor Angela Merkel, she made it clear that a deal based on his proposals were ‘overwhelmingly unlikely’.

Sterling slumped as the anonymous source also revealed that the talks between the UK and Brussels were ‘close to breaking down’ despite the compromises made by the UK.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as UK Prepares for Brexit Negotiations with EU

The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped by around -0.8% and the pairing is currently trading at around NZ$1.9366.

With less than a month left to get a Brexit withdrawal agreement before the Halloween deadline, concerns the differences between the UK and European Union remain.

The Pound slumped against the ‘Kiwi’ as the UK government prepares for Brexit negotiations with the EU.

GBP was left under pressure as the Spectator magazine reported that Irish Prime Minister Leo Varadkar did not want to discuss Boris Johnson’s proposals.

Added to this, the French President Emmanuel Macron and German Chancellor Angela Merkel are not likely to push the bloc to discuss Johnson’s offer unless Ireland was ready to negotiate.

However, forex strategist, Jordan Rochester of Normura stated he was taking the report ‘with a huge pinch of salt’, and added:

‘On the surface, it raises the chances of ‘no-deal’ marginally. [However] because we’re in this limbo with Brexit, any headline moves the market.’

New Zealand Dollar (NZD) Rises despite Slim Chance of Quick US-China Trade Deal

The New Zealand Dollar rose against the Pound on Tuesday despite the chances of a quick US-China trade deal being unlikely.

Hope for progress during this week’s talks dimmed after the US blacklisted Chinese companies over the country’s treatment of Muslim ethnic minorities.

The move which likely deepened divisions between the two sides cause risk-appetite to decline.

While White House economic advisor, Larry Kudlow remained upbeat about this week’s scheduled discussions with China, President Trump insisted he would not be happy with a partial deal.

Speaking about the higher-level talks planned for the end of the week, the US President said:

‘We think there’s a chance we could do something very substantial. I would much prefer a big deal and I think that’s what we’re shooting for.’

Added to this, Trump also said he hoped Beijing found a humane resolution to the Hong Kong protests, warning that if not this could have the potential to hurt trade talks.

Pound (GBP) Falls as No-Deal Brexit to Send UK Debt to 50-Year High

Sterling slumped on Tuesday after the Institute of Fiscal Studies (IFS) revealed that even a ‘relatively benign’ no-deal Brexit is likely to send UK debt to its highest level since the 1960s.

The think tank said borrowing will jump to £100 billion and total debt would rise to be 90% of the national income.

The forecast from the IFS comes just as Chancellor Sajid Javid prepares for his budget, and looks at the challenges facing him.

IFS director Paul Johnson believes that the ‘government is now adrift without any effective fiscal anchor’.

Johnson also noted:

‘Given the extraordinary level of uncertainty and risks facing the economy and public finances, it [the government] should not be looking to offer further permanent overall tax giveaways in any forthcoming Budget.

‘In the case of a no-deal Brexit, though, it should be implementing carefully targeted and temporary tax cuts and spending increases where it can effectively support the economy.’

Pound New Zealand Dollar Outlook: Will NZ Food Inflation Buoy NZD?

Looking ahead to Wednesday evening, the New Zealand Dollar (NZD) could continue to rise against the Pound (GBP) following the release of New Zealand’s annual food inflation data.

If September’s food inflation edges up higher than expected, it could provide a slight upswing for the ‘Kiwi’.

Meanwhile, Brexit developments are likely to remain one of the main catalysts for movement in Sterling exchange rates.

If this week’s Brexit talks with the EU are not as successful as expected, Brexit pessimism is likely to increase and cause the Pound New Zealand Dollar (GBP/NZD) exchange rate to fall.