Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Falls as MPs Return to Parliament

September 25, 2019 - Written by John Cameron

STORY LINK Pound Sterling New Zealand Dollar (GBP/NZD) Exchange Rate Falls as MPs Return to Parliament

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Edges Lower as Opposition Parties Call for Johnson’s Resignation

The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate slumped by around 0.5% with the pairing trading at around NZ$1.9662.

Sterling fell against the ‘Kiwi’ on Wednesday as MPs prepared to return to parliament after the Supreme Court ruled the five-week suspension unlawful.

Prime Minister Boris Johnson now faces calls from opposition parties to resign as the court ruled against the government.

While Johnson said he ‘profoundly disagreed’ with the ruling, he said he would respect it.

The ruling provided the Pound with an upswing of support on Tuesday as investors saw this as a sign the probability of a no-deal Brexit decreased.

However, the court ruling against the government has created further uncertainty causing investors to move away from Sterling.

Commenting on this, head of research at Henderson Rowe, Arthur Baluszynski noted:

‘With both the Tory and Labour electorate fragmented around the deal and no deal issue, the UK is running the risk of turning into an ‘Italy-like’ disaster.’

New Zealand Dollar (NZD) Rises as Trump Says He Will Not Accept a ‘Bad Deal'

The ‘Kiwi’ edged up against Sterling despite signs tensions between the United States and China are on the rise once again.

On Tuesday, Chinese State Councillor and Foreign Minister Wang Yi said Beijing expects the US to ‘remove all unreasonable restrictions’.

During a dinner, Wang stated:

‘China-US relations today have once again come to a cross roads.

‘While China opens wider to the US and the rest of the world, we expect the US to do the same to China and remove all unreasonable restrictions.

‘In a word, China’s efforts and achievements of reform and opening up in the past several decades have been widely recognized. They should not be deliberately ignored or denied.’

Meanwhile, US President Donald Trump delivered a speech, hitting out at China’s trade practices stating he would not accept a ‘bad deal’ in the current negotiations.

Although he stated he hopes the US and China will reach a deal, he stated he hoped they can ‘reach an agreement that will be beneficial for both countries’.

Commenting on this, chief strategist at Sumitomo Mitsui Bank, Daisuke Uno noted:

‘Trump’s speech was full of sensitive words for China – trade practices, currencies, freedom of religion and so on. It is not hard to imagine it will irritate China.

‘In the past China has reacted to US pressure on trade by bringing down the Yuan. It appears we are having that settings again.’

However, this did little to stop the New Zealand Dollar rising against Sterling on Wednesday morning.

Pound New Zealand Dollar Outlook: Will NZD Slide on a Dovish RBNZ?

The New Zealand Dollar (NZD) rose ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) interest rate decision and press conference.

While the bank is expected to leave rates unchanged in September, the 'Kiwi' could be left under pressure if the RBNZ hints at further easing as investors have priced in a higher chance of a rate cut in November.

If the bank follows the lead of other central banks, and its tone is overly dovish, the Pound New Zealand Dollar (GBP/NZD) exchange rate could edge up.

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TAGS: Pound New Zealand Dollar Forecasts