NZD falls against British pound on Brexit hopes

Wednesday 27th February 2019

The New Zealand dollar fell against the British pound on increased hopes a no-deal Brexit might be avoided.

The kiwi traded at 51.95 British pence at 7:50am in Wellington from at 52.38 British pence at 5pm yesterday in Wellington. It was at 68.83 US cents from 68.81 late yesterday.

Markets were cheered after UK Prime Minister Theresa May said she would seek an extension on the March deadline for Britain’s European Union exit, a day after the Labour opposition party said it would support a second referendum.

"Sterling outperformed as political momentum around Brexit continued to shift in favour of ruling out a no-deal Brexit," said ANZ economist Miles Workman. According to ANZ, Brexit uncertainty was alleviated after May announced there will be a meaningful vote on the withdrawal agreement on March 12, which will include any concessions the UK gets from the EU. If that fails to pass there will be a vote on leaving the EU with no deal on March 13, said Workman. And if that fails, there will be a vote on extending the deadline for leaving the EU on March 14.

Domestically, investors will be watching for January overseas merchandise trade data due today. Workman said it is "unlikely to make waves" but he is expecting a small surplus, which would see the kiwi lift at the margin against the US. Overall, however, "NZD is likely to be fairly range-bound without more global news," he said.

The New Zealand dollar was trading at 95.92 Australian cents from 96.10, at 76.18 yen from 76.24, at 60.48 euro cents from 60.56 and 4.6102 Chinese yuan from 4.6070. The trade-weighted index was at 74.25 points from 74.32.

(BusinessDesk)

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