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Pound New Zealand (GBP/NZD) Exchange Rate Soars by 1.3% as UK-EU Brexit Negotiations Improve

August 22, 2019 - Written by John Cameron

GBP/NZD Exchange Rate Rises as EU Leaders Show Compromise on Withdrawal Agreement

The Pound New Zealand Dollar (GBP/NZD) exchange rate soared by 1.32%, leaving the pairing fluctuating around NZ$1.919.

This follows Prime Minister Boris Johnson’s visit to Paris to meet with French President Emmanuel Macron, who agreed that the UK and the EU could compromise on the withdrawal agreement, allowing the UK to leave with a deal on October 31.

Mr Macron said:

‘[A deal could be formed] without totally reshuffling the withdrawal agreement. We should all together be able to find something smart within 30 days if there is goodwill on both sides.’

As a result, Sterling has benefited from renewed market confidence as the deadlock between the UK and the EU over Brexit has been challenged by comments from the French leader and German Chancellor Angela Merkel, who also called for a time-line for alternatives to the Irish backstop.

Mr Johnson was also optimistic, saying that ‘with energy and creativity we can find a way forward’ towards a successful withdrawal agreement between the UK and the EU.

He also added:

‘Let’s get Brexit done, let’s get it done sensibly and pragmatically and in the interests of both sides and let’s not wait until 31 October. Let’s get on now in deepening and intensifying the friendship and partnership between us.’

NZD/GBP Exchange Rate Sinks as Global Trade Tensions Weigh on ‘Kiwi’

The New Zealand Dollar (NZD) fellow following the weakening Chinese Yuan today, as US-China trade tensions continue to weigh on market confidence in the ‘Kiwi’.

Imre Speizer, a Currency Strategist at Westpac, said:

‘The [Y]uan's being followed at the moment because if they depreciate their currency, then it's expected other countries will follow suit and a currency war will ensue.’

Meanwhile, NZD traders are looking over to the US while the Jackson Hole symposium goes underway, which could give some indication as to how central banks are interpreting the global economic situation.

New Zealand Dollar traders will be looking ahead to today’s publication of the NZ retail sales figure for Q2. Any signs of improvement would prove NZD-positive.

NZD/GBP Outlook:

New Zealand Dollar investors will be keeping a close eye on global economic and political developments in the next few days, as the Jackson Hole symposium continues into Friday.

Any indications of the global economic sentiment weighing on central bank’s forecasts could begin to heighten fears of rate cuts from the Reserve Bank of New Zealand (RBNZ) in the near-term, thus weakening the ‘Kiwi’.

Meanwhile, Sterling traders will be awaiting tomorrow’s release of the UK BBA mortgage approvals figure for July.

The GBP/NZD exchange rate’s gains are likely to remain short-lived as the Irish backstop still remains a contentious issue in the House of Commons.

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TAGS: New Zealand Dollar Forecasts Pound New Zealand Dollar Forecasts

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