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Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Muted Ahead of House of Lords Debate

April 4, 2019 - Written by John Cameron

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Flat as ‘Cross-Party Dialogue’ Continues

The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate remained muted, and the pairing is currently trading at an inter-bank rate of NZ$1.9407.

On Wednesday evening the House of Commons voted by a majority of one to force the Prime Minister to ask the European Union for an extension to the Brexit process.

The Bill is due to be debated by the House of Lords later on Thursday, as it needs the approval of the Lords before it can become law.

Speaking to MPs, Brexit Secretary Stephen Barclay said he would hope the Lords would ‘scrutinise this bill passed in haste with its constitutional flaws.’

Meanwhile, Wednesday’s discussions between the Prime Minister and Labour leader Jeremy Corbyn were described as ‘constructive’.

EU Chief Negotiator, Michel Barnier said that he welcomed the ‘cross-party dialogue’ as ‘it’s time for decisions.’

However, European Commission Vice President Jyrki Katainen said that despite Parliament proceeding with this legislation a no-deal Brexit was still ‘highly likely’.

New Zealand Dollar (NZD) Muted despite Boost in Risk Appetite

Wednesday saw trade discussions between the US and China continue in Washington, with hopes that the two countries were closer to reaching a final trade agreement.

Chinese Vice Premier held meetings with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

Larry Kudlow, White House Economic Advisor told reporters yesterday that China had acknowledged for the first time the US has legitimate gripes about cyber hacking, forced technology transfer and IP theft.

This sparked an increase in risk sentiment as hopes were high ahead of Thursday’s scheduled meeting between US President Donald Trump and Chinese Vice Premier Liu He.

Despite the boost in risk sentiment, the New Zealand Dollar (NZD) remained flat against Sterling (GBP) on Thursday.

However, this spark in risk appetite may be premature, as Head of Economics and Strategy at Mizuho Bank, Vishnu Varathan said in a morning note:

‘News that a US-China trade agreement is virtually a done deal has fueled optimism. But markets may be converging too quickly on the ‘done’ before the ‘deal.’’

Pound New Zealand Dollar Outlook: Will the GBP/NZD Exchange Rate Slide on US-China Optimism?

The Pound (GBP) could rise against the New Zealand Dollar (NZD) later during today’s session as attempts to end the current Brexit deadlock through cross-party talks continue.

If talks between the Prime Minister and Labour leader Jeremy Corbyn show signs of progress, Sterling could receive an upswing of support.

The risk-sensitive ‘Kiwi’ could make gains following the meeting scheduled at 20:30 GMT between US President Trump and Chinese Vice Premier Liu He.

If talks between the two show prove successful and reports suggest the US and China are closer to a trade agreement, the Pound New Zealand Dollar (GBP/NZD) exchange rate could slip.

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