Some confidence restored to investors following May’s speech
Theresa May spoke this week and gave some clarity as to Britain’s exit strategy to the EU. May made it clear the UK are heading for a hard brexit, many believed this would cause further Sterling falls against the New Zealand Dollar. In fact on this occasion news is better than no news. Investors gained confidence and Sterling gained strength.
We still have the supreme court ruling due to be released on 24th January on whether parliament will get to vote on the triggering of article 50 and this could well cause further volatility on GBP/NZD.
There are still many unanswered questions surrounding brexit and there is still a great deal of uncertainty about how it will go. The key factor is trade negotiations. Current targets seem border line ridiculous at two years. Sir Ivan Rogers the UK ambassador to the EU recently resigned stating there was insufficient planning for the EU exit and that trade negotiations could take up to ten years. This puts Sterling in a very vulnerable position, I would expect high volatility throughout the year.
CPI Data could cause movement on GBP/NZD
New Zealand Consumer Rice Index (CPI) is released on Wednesday evening by statistics of New Zealand and is a barometer of price movements by the comparison between the retail prices of a representative set of services and goods. CPI is a key measure of inflation and can cause movement on the exchange.
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