The Pound has dropped by -0.4% against the New Zealand Dollar today and could be on the edge of further losses, based on the progress made in future Brexit talks.
Pound Predicted to Tumble if Brexit Talks Grind to a Halt
The recent Pound to New Zealand Dollar losses could expand in the near-term, depending on how the ongoing Brexit talks play out.
Last week saw UK and EU officials hit loggerheads on one particular issue – whether the UK would pay a ‘divorce bill’ to leave the EU and how much this would be if it were paid.
Recent remarks from Trade Secretary Liam Fox have done little to calm the waters, with Fox declaring that;
‘We can’t be blackmailed into paying a price on the first part’.
Fox has also looked at how talks are effectively stalled on the issue of the bill;
‘We think we should begin discussions on the final settlement because that’s good for business, and it’s good for the prosperity both of the British people and of the rest of the people of the European Union.
I think there is frustration that we have not been able to get on that longer-term issue, that we’re stuck on this separation issue, and we’re not able to get on to the issues that will matter in the longer term for the future prosperity of the UK and the people of Europe’.
If it looks like the parting sum is going to continue to dominate discussions (preventing talks from progressing in earnest), then the Pound may progressively weaken due to draining confidence among traders.
New Zealand Dollar Outlook: Will NZ Election Result Unsettle NZD GBP Exchange Rate?
The New Zealand Dollar may face high turbulence later this month when the 2017 general election takes place. The vote is being held on September 23rd and is broadly tipped to see the ruling NZ National Party clash with the NZ Labour Party.
The Nationals took power in 2008, but have since been shedding seats and votes. The National Prime Minister, Bill English, only took the job at the end of 2016 and Labour’s new figurehead, Jacinda Ardern, also only took on her party’s top position in August.
Polls put the Nationals and Labour at neck-and-neck positioning, which some believe will force both parties to seek agreements with lesser parties in order to obtain a majority.
A close-fought contest generates considerable uncertainty among traders and economists, so could lead to significant New Zealand Dollar fluctuations as voting day draws closer.
As the nationals have been in power for almost a decade, a Labour victory could lead to a temporary NZD crash, if only because the status quo has been unsettled by a change of leadership.
Recent Interbank GBP NZD Exchange Rates
At the time of writing, the Pound to New Zealand Dollar (GBP NZD) exchange rate was trading at 1.7967 and the New Zealand Dollar to Pound (NZD GBP) exchange rate was trading at 0.5561.
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