December 4, 2018 - Written by John Cameron
STORY LINK Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Down Despite Brexit Plot Twist
The Pound New Zealand Dollar (GBP/NZD) is down today, and is currently trading at NZD$1.8381, despite news from the European Court of Justice that Article 50 can be revoked - effectively reversing the Brexit process.
This came on the back of Monday’s release of the UK’s manufacturing PMI figures for November, which showed a better-than-expected increase.
However, Brexit remains in focus with Prime Minister Theresa May rallying to gain support for her Brexit withdrawal agreement amid increasing pressure from MPs.
The ‘Kiwi’ meanwhile is recovering from poor trade figures for the third-quarter, which revealed a worsening of New Zealand’s trade balance.
NZD recovered quickly, though, with the weekend’s G20 summit boosting risk appetite after US President Donald Trump and China’s President Xi Jinping arrived at a trade ‘truce’, with Trump saying he would pause the tariffs on Chinese imports for 90 days.
Pound Sterling to NZ Dollar (GBP/NZD) Exchange Rate Down as New Brexit Twist puts Pressure on May
The Pound (GBP) gained yesterday from the release of the UK’s PMI manufacturing figures for November, which showed a better-than-expected result of 53.4 – an increase of 0.2 on October.
GBP found further support from the announcement that Brexit could be ‘cancelled’ by unilaterally revoking Article 50, which strengthened the argument for a second referendum.
MEP of the Scottish Green Party, Andy Wightman, who led the legal action regarding Article 50 last year, said:
‘It is now highly likely that, if the people of the UK were to change their minds and decide to remain in the EU, there is now a route to doing so . . . [And a second vote is] the only option that ends the current chaos and provides a considered and sincere means by which the citizens of the UK can have the final say in this process.’
Tomorrow, meanwhile, could see further Pound (GBP) appreciation with the release of the services PMIs for November, which are expected to increase on October’s figures.
NZD/GBP Exchange Rate Up after Dairy Price Increase
The New Zealand Dollar (NZD) was strengthened today by the release of the latest dairy price figures, which showed an increase in the price of New Zealand’s main export, bolstering market confidence in the ‘Kiwi’.
Tomorrow will see the release of the ANZ commodity price figures for November, with any increase being New Zealand Dollar positive.
The ‘Kiwi’ is showing signs of slowing down as questions arise over the G20 summit’s so-called trade truce between the US and China, and swapping over some of its gains with the GBP.
Joseph Capurso, Senior Strategist at the Commonwealth Bank, commented:
‘The US and Chinese governments are unlikely to bridge their differences on trade. If no new trade deal is reached within 90 days, the US will increase the tariff rate on $US200 billion of imports from China from 10% to 25%.’
GBP/NZD Outlook: Brexit Remains in Focus as Article 50 Reversal Speculation Swirls
The Pound New Zealand Dollar (GBP/NZD) exchange rate is likely to be driven by political forces this week, with Brexit remaining in pole position as the looming 11 December date for Parliament’s vote on the withdrawal agreement draws closer.
However, with talk of the theoretical revocation of Article 50 dominating the headlines, it is likely to see Theresa May come under increasing pressure as the idea of a second referendum becomes more talked about following the ECJ’s statement.
Friday may see Sterling dented by the expected drop in the Halifax housing prices figures for November.
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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts