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NZ dollar weaker against British pound on EC president's Brexit optimism

Friday 20th September 2019

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The New Zealand dollar fell against the British pound after European Commission president Jean-Claude Juncker signalled a new Brexit deal may be possible before Oct. 31.

The kiwi was trading at 50.40 British pence at 8am in Wellington from 50.54 pence at 5pm and was at 63.00 US cents from 63.08 cents.  

The pound was largely unmoved when the Bank of England left interest rates on hold as it waits for more clarity on Brexit. However, it gained ground when Juncker told Sky News “we can have a deal” on Brexit. He also said he was prepared to be flexible on the so-called backdrop deal long as there were alternative arrangements.

The pound “leapt later when EC President Juncker expressed optimism about a Brexit deal, saying he wasn’t wedded to the Irish backstop as long as its objectives were met,” said ANZ Bank senior economist Miles Workman.

The backstop arrangement is a stand-alone protocol aimed at ensuring the Irish border remains open.

Juncker said a no-deal Brexit would have "catastrophic consequences" and said he was doing "everything to get a deal."

Workman said investors will be watching for New Zealand’s credit card spending data. While it is secondary data “the consumer mood is a hot topic at the moment,” he said.

Earlier this week, the Westpac McDermott Miller consumer confidence index fell 0.4 of a point to 103.1 in the September quarter, below the long-run average of 111.1.

Otherwise, there is “little other than global news flow to drive direction today,” he said.

The trade-weighted index was at 70.06 from 70.23 and the kiwi was at 92.69 Australian cents from 92.94 cents.

The New Zealand dollar was at 57.02 euro cents from 57.12, at 68.04 yen from 68.06 and at 4.4697 Chinese yuan from 4.4805.

(BusinessDesk)

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