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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rises as Opposition to No-Deal Brexit Increases

August 16, 2019 - Written by John Cameron

GBP/NZD Exchange Rate Edges Higher as Cross-Party Opposition to Brexit Mounts

The Pound New Zealand Dollar (GBP/NZD) exchange rate rose by 0.6% today, leaving the pairing trading around NZ$1.8919 as cross-party opposition has increased against a no-deal Brexit following Labour leader Jeremy Corbyn’s pledge to lead a caretaker government.

Jo Swinson, the Leader of the Liberal Democrats, has said she would be willing to work with the Labour party to prevent a disorderly exit in October.

Mrs Swinson said:

‘I’ve always said I wanted to talk to [Jeremy Corbyn] about it, and I think that dialogue is really important between anyone who wants to stop a no-deal Brexit…'

‘I think we have to focus on how we can actually succeed in stopping no deal because the clock is ticking. And I think it is good to talk to other parties – and I’m doing that, I’ve been doing that all summer and, obviously, just before the House of Commons rose for the recess I encouraged Jeremy Corbyn to table a vote of no confidence, which he didn’t do.’

As a result, Sterling rose today as growing opposition to a no-deal is providing hopes for UK markets as the UK-EU negotiations look to be locked in a deadlock over the controversial Irish backstop.

NZD/GBP Exchange Rate Falls as US-China Trade Tensions Weigh on ‘Kiwi’

The New Zealand Dollar (NZD) has continued to fall today following yesterday’s publication of the NZ business PMI figure for July, which fell below forecasts at contracted from 51.3 to 48.2.

Craig Eberg, a Senior Economist at BNZ, said:

‘While July's result is no dead-set that the economy at large is contracting, the shrinkage is certainly something to take note of.’

US-China trade tensions continue to weigh on the risk-averse ‘Kiwi’ however, and with China being one of New Zealand’s largest trading partners, this not bode well for the economy in the near-term.

Liz Ann Sonders, a Chief Investment Strategist at Charles Schwab and Company, was downbeat about a possible trade deal in the near future, saying:

‘We're really looking at an environment, I think, where too much damage has been done on the perception of both sides to expect a deal that looks anything like the comprehensive deal that was hoped for even a few months ago.’

GBP/NZD Outlook: Could Sterling Improve as No-Deal Brexit Resistance Rises

New Zealand Dollar traders will be looking ahead to Sunday’s publication of the NZ PPI figures for the second quarter, which are expected to improve from -0.5% to 0.7%.

Meanwhile, Tuesday will see the publication of the Global Dairy Trade Price Index.

Any signs of improvement could buoy the New Zealand Dollar next week.

The GBP/NZD exchange rate will remain sensitive to Brexit developments next week, but with any further opposition against a no-deal Brexit, and we could see Sterling hold on to some of its gains.

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