GBP/NZD forecast: Is a Brexit deal coming to fruition?

GBPNZD Exchange Rate: New Zealand Dollar Gains Over Sterling as Coronavirus Cases Dwindle

The Pound has made some quite substantial gains during this week’s trading. This can predominantly be put down to progress in Brexit negotiations.

Last week rumours began to circulate that a deal has been agreed behind closed doors for the UK to have access to the Customs Union post-Brexit. Following this it has been announced in the press that an agreement over the Irish border issue is on the cards. It seems Brussels would be willing to accept any tax payments retrospectively, similar to the deal originally offered by Theresa May.

Be wary of thinking everything is sewn up however. We have seen rumours circulate in the past that a Brexit deal was close to being agreed only for the Pound to plummet in value a short while after. This was demonstrated when Michel Barnier, the EU’s chief Brexit negotiator, quashed rumours of an Irish border deal, stating that Brexit negotiations had reached a complete impasse.

Pound to New Zealand dollar forecast

New Zealand is heavily reliant on China purchasing its exports, in particular milk. Keep an eye on milk value as this often has an impact on New Zealand dollar value and therefore the pound to New Zealand dollar exchange rate. The continuing trade war between the United States and China has been a cause for concern. As tariffs increase from the US it has an impact on Chinese growth. This then has an impact on New Zealand Dollar. Donald Trump’s recent meeting with Chinese President, Xi Jinping did go well though so we could see an easing of trade tariffs on Chinese exports.

Tomorrow we have the Reserve Bank of New Zealand’s (RBNZ) interest rate decision, although I would not expect any significant GBP/NZD rate volatility. I would be very surprised to see any movement from the current rate of 1.75%. What could cause volatility is the speech after the event when hints could be given as to future monetary policy.

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