Will the New Zealand Dollar continue to strengthen (Daniel Johnson)

GBP/NZD Special – New Labour government Delivers

The New Zealand Dollar has made gains over the pound of late due to a number of contributing factors. The newly formed New Zealand government seem to be having a positive effect on the economy. Last week the budget was released and there seems to be considerable spending promises with a new social program and a new program aiming to solve over priced housing, which is deemed as positive as it could push up inflation and influence monetary policy in the future. We have also seen a rise in milk production, New Zealand’s primary export. Import and Export data came in very strong on Tuesday.

The main factor influencing GBP/NZD at present is Brexit. There is still much uncertainty surrounding how Brexit negotiations will progress. There was a significant rise for Sterling against the New Zealand Dollar following the announcement a deal had been agreed in regards to Irish borders. The opportunity for New Zealand dollar  buyers soon closed however following poorly timed and questionable comments from David Davis. Davis, the UK secretary of state for exiting the European Union, stated that the border deal was not legally binding and the  pound suffered as a result.

We have also seen somewhat of a mutiny in the conservative party.  Eleven tory MPs  won a vote that any deal agreed by Theresa May at the European summit would have to be approved by parliament, substantially weakening May’s position and again sterling fell. The lack of clarity over Brexit negotiations in phase two mean NZD buyers have time their trade well and have realistic expectations.

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