The Pound has tumbled against the New Zealand Dollar during trading today, which comes due to a sizable drop in the odds of a ‘Smooth Brexit’.
The New Zealand Dollar has been giving an exceptional performance, with the latest source of support being widespread instability in the US.
GBP NZD Exchange Rate Softens as Brexit Complications put Investors Off
The latest Pound New Zealand Dollar exchange rate losses have been triggered by Brexit news, with the main issue being how the UK will be able to leave the EU under desirable circumstances.
The most recent spanner in the works has been a claim by lawyers that if the UK leaves the EU, it could still be in the EU single market by default.
If this were the case, then the UK would also have to continue to allow immigration into the UK from the EU, given how immovable EU leaders have been on this matter. As the Government has looked to limiting immigration in the past, this new development is only likely to further complicate proceedings to a considerable degree.
NZD has been in high demand, though mainly due to US developments. The US is currently entering a turbulent political period, with a recount of Wisconsin’s election votes holding the potential to see Trump pushed out of office before he has even become President.
The outcome of these recounting efforts is likely to remain a contentious issue for the near-term, meaning the New Zealand Dollar could remain in demand as investors are deterred from the safe-haven US Dollar.
Further Pound New Zealand Dollar Losses Forecast on Inability to Resolve Brexit Complication
The Pound’s next influencing factor is expected to be the Government’s response to the assertions that single market access will also need to be debated or decided on after the UK leaves the EU.
If the matter is deemed to require another referendum, then the Pound could well plummet, given that such an outcome would trigger another arduous round of campaigning and further delays to the UK’s EU exit.
New Zealand Dollar Outlook Tied to Earthquake Recovery Costs
The NZD’s future faring against the Pound could rely partly on how the nation fares in the long-term with the aftermath of the latest high-impact earthquake to hit the country.
With roads still closed for repairs and huge landslides on the coast leaving transport in disarray, the ability for the national economy to absorb costs and recover in short time will surely be tested in the weeks and months ahead.
A rapid recovery would likely bolster New Zealand Dollar demand, while unexpected difficulties would have an adverse effect on the appeal of the NZD.
Recent Interbank Exchange Rates
At the time of writing, the Pound New Zealand Dollar (GBP NZD) exchange rate was trending in the region of 1.75 and the New Zealand Dollar Pound (NZD GBP) exchange rate was trending in the region of 0.56.
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