March 27, 2019 - Written by John Cameron
STORY LINK Pound New Zealand Dollar (GBP/NZD) Exchange Rate Soars as RBNZ Forecasts Gloomy Future
GBP/NZD Exchange Rate Rises as RBNZ Declares that the Next Rate Decision is Down
The Pound New Zealand Dollar (GBP/NZD) exchange rate soared over 1.7% today and is currently trading around NZ$1.9458 on the inter-bank market.
The New Zealand Dollar (NZD) plummeted against the Pound (GBP) following Reserve Bank of New Zealand’s (RBNZ) gloomy outlook after holding the official cash rate (OCR) at 1.75% today.
The bank said:
‘Given the weaker global economic outlook and reduced momentum in domestic spending, the more likely direction of our next OCR move is down.’
According to Nick Tuffley, a Chief Economist at ASB, the next move for the RBNZ could be as early as May. This has left many ‘Kiwi’ investors feeling jittery today.
NZD has continued to suffer due to signs of an increasingly slowing global economy, following the US Federal Reserve’s slashing of forecasted rate hikes this year which has also affected New Zealand’s closet trading partner, China, which will now likely see similar rate cuts.
Sterling, meanwhile, has benefited today ahead of this evening’s parliamentary ‘indicative votes’ which will see MPs determine the next course for Brexit.
This has increased market confidence in the Pound as fears of a no-deal Brexit are increasingly being allayed by the increasing possibility of a break in the Brexit deadlock.
GBP/NZD Exchange Rate Climbs Higher as Bercow Urges Brexit Deal Changes
The Pound has also benefited from the Speaker John Bercow’s comments that a third ‘meaningful vote’ would not go ahead unless Prime Minister Theresa May offered significant changes to her Brexit deal.
‘I wish to make clear that I do expect the government to meet the test of change. They should not seek to circumvent my ruling by means of tabling either a notwithstanding motion or a tabling motion.’
Today also saw the Labour leader, Jeremy Corbyn, rallying Labour MPs to back an amendment that would push for a second-referendum, or a what the Labour MP who tabled the amendment calls a ‘confirmatory public vote’.
Barry Gardiner, a Labour MP, remained critical, however, saying:
‘To put that up as the only alternative in a public vote and say we will let it go through looks as though you believe that, at the end of it, remain would be the result. It is not where our policy has been.’
GBP/NZD Forecast: Sterling Could Rise on Receding Fears of No-Deal Brexit
New Zealand Dollar traders will be looking ahead to tomorrow’s publication of the New Zealand building permits figures for February, and with any signs of improvement this could provide the ‘Kiwi’ with some much-needed uplift.
Pound traders will be looking further ahead to Thursday’s publication of the UK GDP figures for the fourth-quarter.
The GBP/NZD exchange rate will remain heavily influenced by Brexit developments in the coming days, and with any signs of a no-deal Brexit receding following tonight’s ‘indicative votes’, this could see the Pound soar further.
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