Kiwi dollar up against UK pound on Brexit ructions

Wednesday 23rd October 2019

The New Zealand dollar lifted against the British pound after UK lawmakers passed the Brexit agreement but shot down a bid to fast-track it by the Oct. 31 deadline.

The kiwi was trading at 49.70 British pence at 8am in Wellington from 49.50 British pence at 5:05pm in Wellington yesterday. It was at 64.04 US cents from 64.25 US cents.

Markets were cheered when UK lawmakers endorsed Prime Minister Boris Johnson's Brexit deal by a vote of 339 to 299. However, the pound came under pressure when they voted against a proposed timetable to push it through parliament by the end of the month.

MPs said they need more time to consider the deal and any amendments. The endorsement came after Johnson said he would pull the deal all together and call an election if parliament looked set to delay into next year.

“Sterling struggled as the recent optimism around PM Johnson’s Brexit deal began to unwind," said ANZ Bank FX/rates strategist Sandeep Parekh.

After the vote, Johnson said he would “pause” the legislation until the European Union decides whether it will grant an extension beyond Oct. 31.

The kiwi eased slightly against the greenback when the US Richmond Fed manufacturing index went from -9 in September to 8 in October - its highest reading since April. Importantly, respondents were optimistic that conditions would continue to improve in the next six months.

“It’s a little early to call a turn in manufacturing momentum or a floor in the slowdown for that matter as these data are highly volatile,” said Parekh.

Any gains in the greenback were capped when existing-home sales fell 2.2 percent in September from the previous month to a seasonally adjusted annual rate of 5.38 million, the National Association of Realtors said. The market had expected them to ease 0.7 percent.

The New Zealand dollar was trading at 93.42 Australian cents from 93.47 cents, at 57.56 euro cents from 57.62, at 69.46 yen from 69.80, and at 4.5322 Chinese yuan from 4.5466. The trade-weighted index was at 70.80 points from 70.93.

(BusinessDesk)

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