Sterling has made continued to make inroads against the NZD over the past week, as the markets await this morning’s Supreme Court ruling.
GBP/NZD rates have hit a high of 1.7317, meaning that Sterling’s value has increased by over 4 cents against its NZD counterpart during the past week.
The Supreme Court must decide as to whether they are going to back up the original ruling of the High Court, who had decided that Article 50 needs to be ratified by MP’s before in can be triggered by the UK government.
Article 50 will officially start the process of the UK’s Brexit and as such has a huge bearing on the UK economy and ultimately any decision is likely to have a knock on effect on the value of the Pound.
It is widely anticipated that the Supreme Court will support the High Court’s decision, which in turn means that MP’s may well look towards a softer Brexit than most anticipated. This in turn is likely to help support Sterling’s value and as such is being priced into the current exchange rates.
Therefore I do not necessarily expect an aggressive spike should the anticipated result come to fruition but any result against the grain could cause Sterling to weaken quickly against the NZD.
GBP/NZD rates are already open to greater swings due to the fact the NZD is a commodity based currency and considered a riskier asset by investors. With higher interest rates available investors will move money into the currency to receive greater yields but this also leaves them open to the downside, which means if market conditions shift so can the value on the pair.
This can happen quickly and aggressively and as such I would be wary about leaving any short-term transfer requirements at the mercy of the markets, particularly when you have such key political & economic decision such as today’s Supreme Court ruling.
The current market remains unpredictable and Sterling’s value has wavered excessively over recent weeks. Every time the UK economy takes a step forward it is knocked back and the Pound remains handicapped by the on-going uncertainty surrounding Brexit.
I have said to clients they should be looking for short-term opportunities rather than long-term sustainable improvement until the picture becomes clearer regarding how we will facilitate our exit from the EU and the deals that are in place subsequently.
If you have an upcoming currency transfer to make and are concerned about the current market instability, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact us on 0044 1494 725 353 and ask one of the team for Matt.
Alternatively, I can be emailed directly on [email protected] and can answer any queries you have about the current market trends & forecasts.