NZ dollar gains against UK pound on Brexit ructions

Thursday 29th August 2019

The New Zealand dollar gained against the British pound after UK Prime Minister Boris Johnson moved to stop any bids to block a no-deal Brexit on Oct. 31.

The kiwi was trading at 51.89 British pence at 8am in Wellington from 51.58 at 5:05pm. It remained under pressure against the greenback, trading at 63.37 US cents versus 63.34 cents, after touching a four-year low of 63.26 cents overnight.

Johnson - who has pledged to take the UK out of the European Union with or without a deal by Oct. 31 - announced he would shut down parliament for more than a month, limiting the time his opposition has to stop him.

Prior to Johnson taking the helm in July, lawmakers had rejected legislation that would have allowed a no-deal Brexit three times.

The current UK parliamentary session will end between Sept. 9 and Sept. 12 and the queen will reopen Parliament on Oct. 14.

“This reduces the timeframe available for Parliament to block a no-deal Brexit, thus increasing the chances of a no-deal and/or a general election,” said Capital Economics.

The pound will likely remain under pressure as "the uncertainty is expected to continue with the suspension raising the risk of a no-deal Brexit on Oct. 31," said ANZ Bank economist Michael Callaghan.

Today, investors will be watching for the ANZ Business Outlook survey for a steer on whether confidence has picked up at all.

The trade-weighted index was at 70.83 from 70.76.

The New Zealand dollar was at 94.03 Australian cents from 93.95 cents, at 57.19 euro cents from 57.12, at 67.26 yen from 67.02 and at 4.5376 Chinese yuan from 4.5324.

(BusinessDesk)

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