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NZ dollar slips against the British pound on Brexit developments

Tuesday 12th March 2019

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The New Zealand dollar rose against the US and Australian dollars but fell against the British pound on news that UK Prime Minister Theresa May has secured changes from the European Commission to her Brexit deal.

The New Zealand dollar was trading at 51.77 British pence at 5pm in Wellington, down from 51.89 at 8am. It was at 68.41 US cents from 68.29 and at 96.73 Australian cents from 96.66.

A day ahead of Britain’s parliament voting on May’s Brexit deal, the Prime Minister announced from Strasbourg that she had secured “legally binding” changes, including that the EU can’t try to trap Britain in what’s known as “the Irish backstop,” a measure to ensure there are no borders between Northern Ireland and the Irish Republic.

Keeping Ireland borderless and avoiding a return to sectarian violence has been one of Britain’s key objectives – while Northern Ireland will exit the EU along with Britain, the Irish Republic is remaining in.

Despite the British pound rising on the news, Labour leader Jeremy Corbyn declared the negotiations had failed and the new agreement doesn’t contain anything approaching the changes May had promised.

The last time Britain’s parliament voted on Brexit on Jan 16, May’s proposal was defeated by an historic 230 votes, the biggest defeat for a government in the House of Commons in a century.

Imre Speizer, senior market strategist at Westpac, says better than expected retail sales data released in the US overnight helped the US share market end its day on a positive note and that sentiment had buoyed Asia-Pacific markets.

US retail sales rose 0.2 percent in January compared with expectations of a flat result.

“Even modestly positive news was enough to drive stocks higher,” Speizer says, but added that bond yields were unmoved by the data.

The New Zealand currency was trading at 60.74 euro cents from 60.72, at 76.19 yen from 75.94 and at 4.5928 Chinese yuan from 4.5901. The trade-weighted index was at 74.25 from 73.97.

The two-year swap rate ended the day at 1.8368 percent from 1.8266 yesterday; the 10-year rate was at 2.3675 percent from 2.3550.

(BusinessDesk)

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