The Pound to New Zealand Dollar exchange rate has been close to its best rates on the year recently, but remains vulnerable to shocks from the Brexit process.
As well as the UK’s final ‘end agreement’ with the EU after it exits, attention has recently shifted to a possible ‘implementation phase’.
In Prime Minister Theresa May’s words;
‘Once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and governments are adjusting systems and so forth, depending on the nature of the deal – but a period of time when that deal will be implemented’.
While not explicit, the suggestion has also been raised of EU free movement continuing during this period, something that would likely boost the Pound.
That said, if it looks like free movement will be cut off at the start of the transition or even earlier, then the GBP NZD rate is likely to depreciate heavily.
Offering his take has been BBC Deputy Political Editor John Pienaar;
‘Suggestions of a sharp cut in EU migration after Brexit has given way to caveats and qualification. The rhetoric and slogans of the EU referendum and its aftermath have passed – now Mrs May and her ministers are preparing the ground for the give-and-take and compromises involved in their mission to deliver success and stability outside the EU’.
If these compromises point to a ‘softer’ Brexit than first envisioned, then the Pound could remain stable against the New Zealand Dollar. Talks are expected to start in May, after the French election has passed.
Recent data out of New Zealand Dollar has focused on milk prices, with the Global Dairy Trade (GDT) index showing a rise of 1.6%.
For the New Zealand Dollar to rise against the Pound, consistent gains in price will be necessary.
Commenting on the latest rise was AgriHQ Dairy Analyst Susan Kilsby;
‘Buyers will be aware that New Zealand dairy farmers are having a strong finish to the production season which means there is extra milk powder coming on line, so in this environment it is very positive to see whole milk powder prices creeping back up’.
GDT indexes have historically shown fluctuations in the price of dairy, so a sustained period of price rises will be needed to support the NZD GBP exchange rate.
Recent Interbank GBP NZD Exchange Rates
At the time of writing, the Pound to New Zealand Dollar (GBP NZD) exchange rate was trading at 1.78 and the New Zealand Dollar to Pound (NZD GBP) exchange rate was trading at 0.56.
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