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Pound New Zealand Dollar (GBP/NZD) Exchange Rate Steady, Boris Johnson Outlines ‘Final’ Brexit Deal

October 2, 2019 - Written by John Cameron

GBP/NZD Exchange Rate Rangebound, Markets Remain Cautious on New Brexit Deal Proposal

The Pound New Zealand Dollar (GBP/NZD) exchange rate held steady at around NZ$1.968 today following Prime Minister Boris Johnson’s speech in which he outlined his ‘final’, ‘take it or leave it’, Brexit deal. Mr Johnson also said that the only alternative to the deal was a no-deal on October 31.

He added:

‘That is not an outcome we want, it is not an outcome we seek at all – but let me tell you, my friends, it is an outcome for which we are ready.’

As a result, Sterling failed to gain on the ‘Kiwi’ with UK markets become increasingly jittery on no-deal fears, despite the Benn Act which effectively legislates against a disorderly exit in October.

Irish officials have also dismissed Boris Johnson’s new Brexit offer as ‘unacceptable’, with Lisa Chambers, Brexit spokesperson for the Irish political party Fianna Fáil, saying that this suggests that Mr Johnson is not serious about securing a deal with the European Union.

In UK economic news, today saw September’s UK Markit Construction PMI sink deeper into contraction territory from 45 to 43.3, and further weighing on market confidence in Sterling.

Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, was downbeat, however:

‘Looking ahead the signs do not look positive. Even a moderation in input prices since March 2019 and some moderate improvement in supply chain pressures will not be enough to keep the wolf from the door as no-deal looms and businesses remain Brexit unsteady.’

NZD/GBP Exchange Rate Steady, Weakening US Economy Boosts Risk Appetite

The New Zealand Dollar (NZD) continues to tread water despite improved risk appetite after the US economy continues to struggle from the ongoing US-China trade war.

Martin Rudings, an Analyst at OMF, was optimistic for the ‘Kiwi’, saying:

‘The reality check is that the data that came out last night still puts the chances of the [US Federal Reserve] cutting rates at 50-50 and if it is data dependent then the data is starting to turn a bit.’

Any further indications of a struggling US economy could improve the NZD/GBP exchange rate, with traders flocking safe-haven currencies for riskier assets like the New Zealand currency.

GBP/NZD Outlook: Could Sterling Sink on EU Brexit Deal Rejection?

Sterling traders will be looking ahead to tomorrow’s release of September’s UK Markit Services PMI, which is expected to ease from 50.6 to 50.3. However, the index beats forecast, we could see the Pound edge higher on restored hopes for the UK economy.

‘Kiwi’ investors, meanwhile, will be forward to tomorrow’s release of September’s ANZ commodity price index, which is expected to improve from 0.3% to 0.4%.

The GBP/NZD exchange rate could begin to sink, however, if the Conservative Government’s newly forged Brexit deal is rejected by the European Union, as this would throw the UK into political uncertainty ahead of the October 31 deadline.

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