Last week’s high: NZ$1.9837
Last week’s low: NZ$1.9091
Irish Border Uncertainties Knock Pound from Highs
The Pound to New Zealand Dollar exchange rate slipped from its best levels all year on Friday, as Pound investors became anxious that the UK and EU may not reach an agreement on how to handle the border between Ireland and Northern Ireland post-Brexit.
As both nations wish to keep a soft border (despite the UK now wanting a hard border with the rest of the EU) some UK MPs have suggested that a deal that works for everyone may not be possible.
However, Irish Foreign Minister Simon Coveney stated on Friday that he believed an agreement was doable, and hoped to see one reached before the EU summit on the 14th of December.
The New Zealand Dollar was boosted slightly at the end of the week due to slightly stronger demand for risk-correlated currencies. However, as recent New Zealand data has disappointed, its gains were limited and GBP/NZD was still up on the week’s opening levels.
NZD Outlook: Brexit Developments in Focus
Markets have been hoping for months that the first phase of Brexit talks would near an end before the close of the year, but if disagreements on the divorce process remain by the time of the EU summit, this could delay the outlook for the second phase well into 2018.
As a result, investors will be hoping for news suggesting that the UK and EU are closing in on agreements regarding the Irish border. If the Irish border remains an issue throughout next week, the Pound could plunge as markets worry about potential delays in Brexit talks.
Data is less likely to drive GBP/NZD next week. While Britain’s services PMI from Markit could be inspiring, Brexit news will be much more influential.
New Zealand Dollar exchange rates, meanwhile, could be influenced by next week’s Global Dairy Trade (GDT) auction, as well as NZ manufacturing sales data from Q3.
09:30 UK Construction PMI
NZ Global Dairy Trade (GDT) Auction
09:30 UK Services PMI
NZ Manufacturing Sales
09:30 UK Balance of Trade
09:30 UK Manufacturing and Industrial Production
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Senior Currency Broker
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